The financial markets in New York and London recovered from sharp falls spawned by the economic turmoil in East Asia.

In New York stocks recovered from their early lows, after a day of choppy trading on Wall Street.

The market plummeted by some 130 points in the first 15 minutes of trading. But after opening down more than 100 points, the Dow was up again more than 40 points in mid-afternoon trading.

The Dow closed with a gain of 66.76 at 7647.18, with stocks 0.88% higher.

Analysts said the bounce in US stocks was a relief rally after the Dow lost 386 points last week -- its biggest weekly decline in point terms.

The London stock market staged a recovery after more than £26bn was wiped off the value of leading shares.

Fears of a meltdown sent the FTSE 100 index tumbling by 150 points to 4988.3 in the morning.

But the rally in New York helped lift it to 5068.8 by the close -- a fall of 69.5 points or around £12bn.

Gloomy news from Asia

London was prepared for heavy falls when traders arrived at their desks to hear the gloomy news from Hong Kong and Japanese dealing floors.

The Hang Seng index of top Hong Kong stocks fell a massive 773.6 points to close at 8121.1, a fall of nearly 9%, following the collapse of its largest investment bank, Peregrine Investments.

At one stage the Hong Kong index fell by 11%, but it managed a late recovery, though the market remained nervous after last week's 17% fall.

In Japan, the British Prime Minister, Tony Blair, said turmoil in Asian financial markets underscored the need for openness and economic co-ordination.

Speaking ahead of an EU-Japan summit meeting in Tokyo, Mr Blair reaffirmed his faith in the region's economies.

But he said there was a need for a financial system that is open and that builds confidence amongst investors.

The American President, Bill Clinton, called on the Asian economies to make the economic reforms that the International Monetary Fund has called for.

However, experts who believe that the Asian crisis will get worse fear that if Asia slides again on Tuesday it could start the whole roller-coaster ride all over again.
 

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