Weakness on Asian markets spills into Europe
Nov. 19, 1997
LONDON (AP) _ Tokyo stock prices fell sharply Wednesday and Hong Kong shares slipped, but European markets rebounded after Wall Street began trading with no surprises.
Many players were staying out of the markets, concerned that the recent financial troubles in Asia have not run their course.
``Investors are being cautious,'' said Stefan Svinger, an equities trader at Ballmaier and Schulz in Frankfurt, Germany. ``They fear the worst isn't over on global emerging market bourses.''
Prices were lower in early trading on the three biggest European exchanges _ London, Paris and Frankfurt _ but they bounced back in the afternoon.
Wall Street opened with little change, then the Dow Jones industrial average moved into positive territory, gaining 50 points after two hours of trading.
Prices staged a partial comeback on the London Stock Exchange, Europe's biggest, with investor sentiment improving along with the prices in New York.
London's blue-chip Financial Times-Stock Exchange 100-share index closed with a loss of 15.3 points, or 0.3 percent, at 4,830.1. But earlier, the ``footsie'' had been down by almost 60 points, more than 1 percent.
In Paris, the CAC 40 index climbed by 0.3 percent, rising by 7.95 points to close at 2,790.56 as it wiped away earlier modest losses. Frankfurt's DAX index finished with a modest gain, up 1.35 points at 3,834.82, also bouncing back from an earlier decline.
The sharpest market moves came in Asia, where recent market turmoil originated with a speculative assault on Hong Kong's currency last month.
Although the Tokyo Stock Exchange, Asia's biggest market, had rallied strongly earlier in the week, prices plunged 5.3 percent on Wednesday after Prime Minister Ryutaro Hashimoto said no tax money will be used to support Japan's troubled banking system.
Japan's central bank had stepped in this week to support a major regional bank that effectively collapsed, Hokkaido Takushoku Bank. Earlier this month, the Sanyo Securities brokerage house went broke, and the recent market rallies had been explained in large part by speculation that the government would do more to ease the situation.
The benchmark Nikkei Stock Average shed 884.11 points, closing at 15,842.46 points.
In Hong Kong, prices fell, but only by 0.9 percent, with the key Hang Seng index losing 90.82 points to close at 10,154.36. The Hang Seng had lost 174.57 points Tuesday.
Share prices rose 1.6 percent in South Korea, where the government announced an emergency bailout for its financial market and debt-ridden banks, hoping to restore international confidence in its economy. The plan calls for relaxing controls on currency trading and for the central bank to borrow more than $10 billion from foreign banks.
The government also dismissed two senior economic officials blamed for the country's financial troubles, and appointed a new finance and economy minister and chief economic adviser.