Wall St rallies in early trading
Updated on 30 September 2008
Wall Street stocks recovered slightly in early trading today amid hopes that the $700bn bailout plan for the US financial sector was not dead.
Arthur Hogan, chief market analyst at Jefferies & Co in Boston, said: "There's an overarching belief that at some point this week, whether it's Wednesday or Thursday, we'll get something passed by the House."
The Dow Jones was up 1.73 per cent in early trade, while the dollar rose 1 per cent against the yen. Oil prices also rose.
In Europe, Ireland unveiled a blanket guarantee for savings held by its banks, covering up to 400 billion euros. The move came after the Irish Stock Exchange suffered record falls yesterday.
European markets fluctuated wildly today. Bank shares suffered the biggest falls with stocks in BNP Paribas, Royal Bank of Scotland and UniCredit down by up to 8 per cent.
By late morning the FTSE had recovered to be 0.2 per cent up, after an earlier slide which took it to its lowest level since November 2004.
The uncertainty in European stocks followed sharp decreases in shares in Asia, after US Congress kicked out the financial bailout plan, raising the prospect of further turmoil. It prompted the Dow Jones to suffer its biggest ever one-day points fall.
Heino Ruland, analyst at FrankfurtFinanz, said: "The package [US bailout] must come and it will come.
"But it will be painful for the banks, which will have to clean up their balance sheets."
In Tokyo the Nikkei plunged almost five per cent to hit a three-year low, before clawing back slightly as investors sold shares and bought safer investments such as bonds and gold.
Shares prices in Hong Kong, Taiwan, South Korea and Australia all opened significantly down, before making slight recoveries.
