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Thursday, 11 July, 2002, 21:48 GMT 22:48 UK
US stocks stage late recovery
Traders at the New York Stock Exchange
It was a busy day on Wall Street
Shares on Wall Street staged a late recovery on Thursday after having seen heavy losses earlier in the day.

But in Europe and Asia equity prices fell once again, as investor confidence continued to suffer in the wake of US accounting scandals.

Thursday's market movements
Dow Jones -0.1%
Nasdaq +2.1%
FTSE -4.3%
Cac (France) -4%
Dax (Germany) -1.7%
On Wall Street, the Dow Jones industrial average was down by more than 200 points at one point, but by the close of trade was down just 11.97 points at 8,801.53.

In London, the FTSE 100 share index closed at a five-year low of 4,230 after falling 190.1 points, a drop of 4.3%.

Around the rest of Europe, markets were showing heavy losses, while Japan's Nikkei 225 share index closed down 2.5%, hammering markets around Asia.

Battered by scandal

A series of accounting and ethical scandals in recent months has knocked investor confidence.

A high-profile speech on Tuesday by President George W Bush, intended to help bolster investor confidence by boosting legal penalties for corporate wrongdoers, seems to have had little effect.

And over the past couple of days more bad corporate news has unsettled investors.

On Wednesday, US telecoms firm Qwest Communications said it was the subject of a criminal investigation, and on Thursday the drugs firm Bristol-Myers Squibb said US regulators were investigating its sales practices.

The news from Bristol-Myers, together with a slightly worse-than-expected weekly jobless data, contributed to heavy falls in Wall Street during early trade.

Some cheer

But there were some good pieces of US corporate news on Thursday.

What the stock market needs more than anything is time and no more scandals

Brian Belski
US Bancorp Piper Jaffray
US retailer Wal-Mart saw its share price rise after it increased earnings estimates following better-than-expected sales last month.

And shares in the photographic firm Eastman Kodak also jumped after it said its earnings would beat earlier forecasts.

Despite the late rally, analysts warned that investors were likely to keep selling until they felt both corporate earnings and honesty was improving.

"What the stock market needs more than anything is time and no more scandals," said Brian Belski, market strategist at US Bancorp Piper Jaffray.

"We have to get to the point where we say that the values (of shares) are too good to ignore, and then this crisis in confidence goes away.

"We're not there yet," he added.

'Vicious spiral'

The few pieces of news in London offered investors little comfort.

A number of firms, including JJB Sports and Autonomy, issued profits warnings, and brewing giant SABMiller postponed a planned share issue.

But the fashion chain Burberry confirmed it was to go ahead with its partial flotation, although its share price of 230p was at the low end of its target range.

Analysts said it was difficult to say when the falls would end.

"It's a vicious spiral," said Anais Faraj, an economist at Nomura International.

"It's almost become a self-fulfilling prophecy now.

"Everyone knows the market will fall and so they sell today, and it falls further, and they sell again."

No mercy

The fact that US worries have infected Asian markets is especially telling, since most indexes in the region have performed strongly this year.

An S&P 500 futures trader
Wall Street is gripped by a crisis of confidence
"With New York stocks in a seemingly bottomless spiral and Europe following, there's no way we can avoid the fallout in Japan," said Masaharu Sakudo of Tachibana Securities.

All Asia's major markets fell, including South Korea, Singapore, Malaysia and Hong Kong, where the main index dropped 2.4%.

Only Shanghai, traditionally disengaged from global market trends, saw gains, with the main index up almost 4% on the back of domestic news.

The BBC's John Andrew reports
"The markets took another severe battering"
The BBC's Stephen Evans
"US Investors do not know which way to turn"
David Schwartz, stock market historian
"I think the economic situation is pretty placid right now"
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
Launch marketwatch
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See also:

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