Shares regain poise as fears ease

US shares ended slightly lower in Monday trading on Wall Street after a surprise rise in American retail sales eased continuing recession fears.

With data showing retail sales edging up in March, the main Dow Jones index finished down just 17 points to 12,309.

With Asian and European shares earlier falling sharply, analysts had expected US stocks to decline more steeply.

While the Nasdaq lost 15 points, the UK's FTSE 100 finished the day down 64 points to 5,832 in London.

Germany's Dax lost 49 points, while France's Cac gave up 31 points, trimming earlier losses.

Japan's Nikkei finished sharply lower, losing 406 points, mirroring similar large declines across East Asia.

Poor results

Despite the surprise rise in US retail sales in March, other news suggests that signs of economic downturn are continuing.

"For most of this year, we are going to be watching profit growth, or lack thereof"
Simon Doyle, Schroder Investment Management

Wachovia, the fourth-largest US bank, on Monday reported a $350m (£176m) first-quarter loss.

This followed after US General Electric posted a 6% fall in profits on Friday, and a closely-watched report said US consumer confidence was at a 26-year low.

"The fact that [GE] missed expectations really has spooked investors that the reporting season is going to show that the slowdown in the US is impacting corporate profits much more than expected," said Juliette Saly, analyst with ComSec.

The World Bank, meanwhile, has warned of the stark threat to developing countries because of the sharp rise in food prices.

Analysts said the credit crunch would inevitably take its toll on the performance of leading companies across the spectrum of industry.

"We've seen the immediate effect of the credit crisis on financials and there is a second round effect where it hits activities and profit growth in broader corporates," said Simon Doyle, head of strategy at Schroder Investment Management in Sydney.

"For most of this year, we are going to be watching profit growth, or lack thereof. That is the big risk to equity markets now."

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