Leading European share prices climbed on Wednesday, September 12, in volatile markets, with aviation, banking and insurance stocks in particular buffeted by terrorist attacks on the heart of the US financial district.
Trading levels were low as many investors gave markets a wide berth and bankers tried to come to terms with the loss of colleagues feared killed in the attacks on the World Trade Center.
In London, the FTSE 100 plumbed new three-year lows before regaining 2.79 percent to close at 4,882.1 points. The Frankfurt DAX index added 1.44 percent at 4,369.43 points. The Paris CAC 40 advanced 1.34 percent to close at 4,114.26 points.
Currency markets and the US unit stabilized, with the euro buying $0.9068. Oil prices ebbed further away from high points above $31, falling below $29 a barrel and pulling share prices of oil stocks down.
Asian markets suffered heavy losses. Tokyo stocks tumbled 6.6 percent to below 10,000 points for the first time in 17 years. Hong Kong share prices plunged 8.9 percent Wednesday to close below the 10,000-point level for the first time in two and a half years.
Analysts said that it was too early to know what the implications of the attacks would be on world markets and economies once the dust had settled, but said there was a risk that the events could hurt US consumer confidence badly and tip the already flagging US economy into recession.
"The consumer was the mainstay of the US economy and if this does hit consumer confidence badly then obviously it will hit the economy and growth prospects," said Jane Foley, an economist with Barclays Capital.
"It comes to the same conclusion that there is far more recessionary risk than there was before," she told AFP. "Commerce on Wall Street was the mainstay of the US economy and if it grinds to a halt we are not going to see growth produced and things are going to slow down very significantly," she said.
Insurance, banking and airline stocks were all under pressure after devastating damage to buildings in Manhattan and concerns about the impact on demand for air travel. British Airways tumbled in early trade, but later pared losses to finish unchanged at 208 pence. None of BA's planes were involved in the hijackings. But BA's North American links remain cancelled and the carrier also suspended flights to Islamabad, citing its proximity to Afghanistan, and to Tel Aviv.
Lufthansa of Germany sagged 2.92 percent to €12.62 while Swissair fell 4.65 Swiss francs, or 6.46 percent, to 67.35. Analysts were at a loss to predict the eventual impact on markets.
An equity strategist at a major investment bank in London who asked not to be named said: "I think the market's beginning to turn thoughts to the possibility of recession — that's certainly where the Far East seemed to be looking this morning, particularly Hong Kong.
"Whether that's an over-reaction it's impossible to say at this stage. It's going to be a huge hit to confidence in the States. The risks at the moment are clearly on the downside but it's impossible to quantify at this stage."
Zurich's SMI index shot up 2.52 percent to 58,838.4 points, the Milan Mib 30 index edged up 0.86 percent to 29,357 points, the Brussels Bel-20 index rose 0.61 percent to 2,597.07 points, the Madrid Ibex-35 index added 0.11 percent at 7,336.7 points and the Amsterdam AEX index climbed 0.66 percent to 452.92 points. ― (AFP, London)
by Daniel Rook
© Agence France Presse 2001
© 2001 Mena Report (www.menareport.com)
