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European Markets Dip, Then Recover

September 21, 2001

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FRANKFURT, Germany (AP) _ Stocks fell sharply Friday on European markets, then recovered some ground in volatile trading clouded by worry over the outcome of the U.S. campaign against terrorism. The Paris, London, Frankfurt and Zurich exchanges finished down for the day after losses earlier in Asia.

Key market indicators in London, Frankfurt and Paris were each down more than 5 percent in early afternoon trading but then cut their losses even as Wall Street recovered from a steep early selloff.

London’s benchmark index, which at one stage fell 6.6 percent, finished down 2.7 percent at 4,433.70. It was the lowest close the Financial Times-Stock Exchange 100-share index since April 29, 1997.

Frankfurt’s Xetra DAX index and Paris’ CAC40 sank to lows last seen in October 1998 in the early afternoon but each recovered. The key Paris index lost 2.3 percent to close at 3,652.87, while the German DAX fell 0.59 percent to 3,787.23.

In Zurich, however, the benchmark SMI closed down 5.4 percent at 5,110.20. At one point, the index dipped below 5,000 points for the first time since May 1997.

The Dow Jones industrial average plunged 313 points in the opening minutes of trading, then regained ground and fell again. With an hour to go in trading, the Dow was down 157.98 at 8,218.23, a loss of 1.9 percent.

``Basically these markets are not driven by fundamentals, they are driven by sentiment. And sentiment is nervous,″ said Tamzin Hobday, pan-European strategist at WestLB Panmure investment bank in London. ``Any risk is considered too much risk.″

Asian markets also had a rough ride.

``We’re not looking for good news at the moment. We pretty much take it for granted that these markets are going to get absolutely slammed,″ said Adrian Foster, senior economist for Nomura Securities in Singapore, where stocks closed with a loss of 5.5 percent.

In Tokyo, Asia’s biggest market, the 225-issue Nikkei Stock Average fell 230.17 points, or 2.4 percent, to finish at 9,554.99.

The Nikkei had been even lower in early trading, diving to levels last seen almost 18 years ago, after the Dow plunged 4.4 percent and the Nasdaq composite index dropped 3.7 percent Thursday.

Hong Kong’s Hang Seng Index fell 4.1 percent to its lowest finish in almost three years.

Some fear massive layoffs in U.S. industry _ particularly the aviation business, which was hit hard after terrorists hijacked passenger jets and crashed them into New York’s World Trade Center and the Pentagon in Washington _ could snowball into economic calamity.

War fears have filled markets with jitters, with President Bush telling his nation Thursday night that Washington is demanding that Afghanistan’s ruling Taliban militia hand over terrorism suspects, including alleged terrorist mastermind Osama bin Laden.

Afghanistan’s ambassador to Pakistan said later the Taliban would not surrender bin Laden without evidence.

In Seoul, blue chips lost 1.7 percent Friday on concerns about massive damage to high-tech companies that are a backbone to South Korea’s economy.

``People are worried about what’s going to happen in the U.S., particularly with tech stocks,″ said Abdul Wahid Butt, head of research at Indosuez W.I. Carr Securities in Seoul. ``There is no point in holding them.″

Taipei’s market, where tech shares also are crucial, slid 2.9 percent to their lowest close in eight and a-half years. Sydney shares gave up 1.4 percent on the day while shares in Manila fell 1.2 percent to a three-year low.

The U.S. dollar rose Friday against most other major currencies. The euro was quoted at 91.43 cents in late trading in Europe, down from 92.74 cents late Thursday. The dollar rose to 116.84 Japanese yen from 116.07 yen late Thursday. The British pound fell to $1.4566 from $1.4650.

Gold rose in London to $290.60 per troy ounce from $288.20 on Thursday.

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