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Friday, 14 September, 2001, 20:53 GMT 21:53 UK
Shares and dollar dive
Workers in the City of London observe Friday's three minute silence
Workers in the City of London observe Friday's three minute silence
Shares in Europe have fallen back as markets, nervous after the attacks on the US, feared the implications of possible military action.


Investors were also concerned about how US stock markets will react when they open next week, and the main share indexes in London, Frankfurt and Paris dropped sharply in afternoon trade.

The dollar also fell against the yen and the euro, while oil prices soared.

In Asia on Friday, Japan's main share index broke back through the key 10,000 level, but elsewhere in the region many indexes fell.

Europe cautious ahead of US re-opening

Stock exchanges across Europe halted for three minutes at 1000 GMT in remembrance of the victims of the attacks in the US.

Markets at Friday's close

London: FTSE 100,
-3.8%
Frankfurt: Dax,
-6.3%
Paris: Cac 40,
-4.97%
Tokyo: Nikkei 225,
+4.1%
When trading resumed, stock markets dropped sharply as worries increased over prospects for the world economy and the effects of any military action.

The uncertainty was increased by the absence of trade in New York, with investors speculating how the US stock markets might react when they re-open next week.

"[Investors] are trying to position themselves ahead of the US opening on Monday," said Mark Tinker, global head of debt and equity strategy at Commerzbank in London.

"On balance they're more afraid it will go down sharply than go up sharply."

Dollar falls

The dollar fell back against the yen as cash headed back towards currencies considered safe-havens.

Against the euro, the dollar has lost more than a cents during London trade on Friday. One euro was worth $0.9211 at 1800 GMT.

Reports that Afghanistan's Taleban regime has threatened to retaliate against any US attacks on their country heightened nervousness within markets.

"The Taleban comment has impacted the dollar," one analyst said.

"If the possible revenge actually happens, it will have a big negative impact on the global economy."

The dollar also slipped against the euro,l at $0.9211.

Oil prices surged, with Brent crude oil for November delivery up $1.26 at $29.63 per barrel.

Nikkei rebounds

In Japan the benchmark Nikkei 225 index broke back through the key 10,000 level, which it fell through on Wednesday in the immediate aftermath of the attack on the US.

The Nikkei eventually closed up 4.1% at 10,008.89.

An investor watches the board at the Thai Stock Exchange in Bangkok
Thai shares continued to fall on Friday

Traders were hopeful that shares will not fall sharply when the US stock markets re-open on Monday.

Local factors were also at work.

Reports that the retailer Mycal had begun bankruptcy proceedings raised confidence in the progress of Japan's economic reforms.

"The market has been thirsty for signs that the bad-loan cleanup is progressing. This would be a clear symbol of that," said Hirokazu Yuihama, senior strategist at Daiwa Institute of Research.

Asia mixed

Despite the healthy rise in the Nikkei, performance across other Asian markets less impressive.

Many investors are waiting for the US markets to start trading again.

"The mood is still pretty sombre and people are just waiting to see what happens in the US," said Raymond Tsui of South China securities in Hong Kong.

The Hang Seng index finished up nearly 1% in Hong Kong, while the Singapore STI index was down more than 2%.

The main indexes in Taiwan and South Korea both dropped more than 3%, while the Thai index fell over 6% for the second day running.

In India the main share index was more than 5% lower, with some traders worried about the possibility of a regional war involving Afghanistan.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Andrew Walker
"All these market movements are due largely to growing fears about escalating conflict"

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The Markets: 9:29 UK
FTSE 100 5760.40 -151.7
Dow Jones 11380.99 -119.7
Nasdaq 2243.78 -28.9
FTSE delayed by 15 mins, Dow and Nasdaq by 20 mins
See also:

14 Sep 01 | Business
Oil prices soar on supply fears
13 Sep 01 | Business
US markets to re-open on Monday
13 Sep 01 | Business
Disaster planning saves Wall Street
14 Sep 01 | Business
Insurance costs 'incalculable'
12 Sep 01 | Business
Dollar's solid image threatened
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