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Last Updated: Thursday, 30 August 2007, 20:50 GMT 21:50 UK
Uncertainty prompts mixed markets
Traders on the Frankfurt stock exchange
Investors remain on edge amid uncertainty about interest rates
Uncertainty over the prospect of a US interest rate cut saw mixed trading on Wall Street - after European markets had surged ahead.

The Dow Jones slipped 0.4% after Lehman Brothers said profits at several major investment banks would suffer, though the tech-heavy Nasdaq was 0.1% ahead.

Early upward movement in New York had prompted European markets to rally.

The FTSE 100 in London and the Cac in Paris both closed 1.3% ahead, while Germany's Dax added 1.2%.

Credit concerns

The Dow, which lost 50.6 points to 13,238.7, was dragged down by the shares of Goldman Sachs, Bear Stearns and Morgan Stanley and Merrill Lynch all falling.

This followed Lehman Brothers saying that the firms' third-quarter earnings would all be hit by woes in the credit market - as defaults for the sub-prime mortgage sector continued.

Analysts said that concerns that the credit squeeze was hurting the US economy were still prevalent.

But they added the chances of the Federal Reserve cutting rates had grown because of Commerce Department data which showed the US economy grew at an annual rate of 4% in the second quarter of the year.

This was an improvement on the initial estimate of 3.4% from several weeks ago but still below some analysts' expectations.

Bernanke message

Comments from Fed boss Ben Bernanke on Wednesday had already lifted hopes of such a cut.

Mr Bernanke had said he was "prepared to act as needed" to ensure credit market troubles did not adversely affect the economy.

However a report showing a growth in the number of Americans claiming unemployment benefits had also made investors cautious, analysts added.

"The jobless claims increasing ... is not a sign of economic strength," said Charles Campbell, of Miller Tabak in New York.

"Given the other issues in the financial area, you need to have the consumer in the game and in order to do that they have to have jobs in order to spend."

Earlier on Thursday, Asian shares had risen - spurred on by Wednesday's big rises in US stocks - with the Nikkei in Tokyo closing up 0.9% at 16,153.8.


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





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