Monday, October 18, 1999 Published at 21:38 GMT 22:38 UK
Business: The Economy
Stock markets stabilise
Sharp losses on European markets were stemmed by close of trade
Stabilising share prices in the US have stemmed the sharp slide in European stocks prompted by gloomy comments on the US economy last week by the head of the US central bank, Alan Greenspan.
But renewed bargain-hunting in New York saw early European losses stemmed as the FTSE index of leading London shares finished 38.1 points lower at 5,869.2, having slipped as low as 5,798.3 early on.
Shares in Frankfurt, Paris and other European exchanges also recovered from the day's lows.
On Wall Street, the Dow Jones Industrial Average ended up closing sharply higher - boosted by late session buying.
The Dow closed up 96.57 at 10,116.28 after having traded as low as 9976.02 and as high as 10,116.23.
The S&P 500 was up 6.75 at 1,254.15. The Nasdaq composite closed down 42.68, or 1.56%, at 2,689.15 - but was well above its session low of 2,632.01.
The improvement in sentiment came too late for Japanese investors. In Tokyo, the Nikkei index of leading shares fell by a further 2% on Monday, following a smaller drop on Friday, despite intervention by the government pension fund.
The index closed down 326 points at 17,275.
The falls were driven by worries that interest rates might soon rise in the United States following a sharp rise in producer price inflation.
Analysts said that despite the upturn, investors were still jittery and would be closely watching the figures for US consumer prices, published on Tuesday, and US trade figures, released on Wednesday, for signs of any further inflationary pressures.
Dow Jones at six-month low
The Dow had finished down 267 points on Friday at 10,019. That ended a bad week for the index, which lost more than 5.9% of its value in five days.
The trigger for Friday's fall was a warning by US central bank head Alan Greenspan that stocks were over-valued, and a set of economic figures which suggested that inflation was threatening to take a grip again.
One portfolio manager said he believed Greenspan had been trying to put a dampener on the stock market so it would not be so strong going into the Christmas shopping season.
A strong market, combined with rising consumer sales, could point to another interest rate rise.
The Dow has been the main driving force for the stock market rises - and recent falls - in many other countries around the world, such as London, where the benchmark FTSE index has fallen to its lowest level since February.
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