[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Wednesday, 5 July 2006, 23:52 GMT 00:52 UK
Missile tests shake world markets
South Koreans protesting against North Korea's missile tests
The missile tests have caused political, but not economic, uproar
North Korea's missile tests have shaken world markets, with share indexes in Europe and the US falling after earlier slides in Asia.

Leading French and UK share indices both slipped by 1%, with their German counterpart slipping by 1.8%.

The main US index, the Dow Jones Industrial Average, lost 0.7%.

South Korean and Japanese shares had earlier fallen sharply before investors regained some confidence, and the main indices closed about 0.5% lower.

It was a similar picture for the South Korean won and the Japanese yen, while gold prices also jumped before falling back as traders took profits.

"In the Asian session overnight, there was a bit of concern about what was happening with these missiles," said Chris Iggo, strategist at AXA Investment Managers.

"The Asian markets were weaker and I think that just followed over into Europe."

Central banks

Although the North Korean missile tests raised the issue of security in the region, the lack of a major sell-off of shares left most analysts feeling that the market impact would be limited.

"Today's market reaction shows that we're not going to see capital flight right away. I am encouraged by the lack of a major knee-jerk reaction sell-off," said Kirby Daley, a strategist at brokers Fimat.

Japan's Nikkei-225 index fell 0.7% to close at 15,524, ending a four-day winning streak.

South Korea's Kospi index ended the session 0.5% lower.

A Bank of Korea spokesman said that the missile launch and its effect on financial markets would be an important consideration ahead of its interest rate meeting this week.

Japan's central bank is expected to respond to the country's economic recovery by raising its key interest rate from zero next week.

Japanese economists said that the missile tests would have a negligible impact on their decision.


MARKET DATA - 11:36 UK

FTSE 100
5429.64up
23.70 0.44%
Dax
5733.05up
19.54 0.34%
Cac 40
3784.02up
14.48 0.38%
Dow Jones
10403.79up
78.53 0.76%
Nasdaq
2273.57up
35.31 1.58%
S&P 500
1115.71up
11.22 1.02%
BBC Global 30
5707.15up
20.65 0.36%
Data delayed by at least 15 minutes


SEE ALSO
World stock markets close mixed
16 Jun 06 |  Business
World stock markets are soaring
15 Jun 06 |  Business
Indian shares stage record rise
15 Jun 06 |  Business
Storm subsides on world markets
14 Jun 06 |  Business
US continues global market slump
13 Jun 06 |  Business



FEATURES, VIEWS, ANALYSIS
Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit

PRODUCTS & SERVICES

Americas Africa Europe Middle East South Asia Asia Pacific