Asian markets fall; Europe mixed after US rate cut

The surprise Fed move was aimed at fears that trouble on financial markets from the US subprime crisis was spreading to the broader economy.

stock market good 88 (photo credit: )
stock market good 88
(photo credit: )
SHARES Turbulence roiled world stock markets again Tuesday, with Asian stocks falling on fears of recession in the US, while European stocks fell, then bounced back as the US Federal Reserve cut interest rates by a steep three-quarters of a percentage point. The surprise Fed move was aimed at fears that trouble on financial markets from the US subprime crisis was spreading to the broader economy. Interest rate cuts tend to boost stocks. TEL AVIV The Tel-Aviv-25 Index fell to the lowest in four months, led by Israel Chemicals Ltd. and Israel Corp. The TA-25 Index lost 15.19, or 1.4 percent, to 1,101.96 at the close in Tel Aviv, the lowest since September 20, as 18 members in the measure fell, six gained and one was unchanged. The gauge has retreated 11% since closing at a record on October 31. Investors traded about NIS 4.36 billion in shares and convertible securities. Israel Chemicals, which extracts minerals from the Dead Sea to make fertilizers and chemicals, dropped NIS 2.31, or 5%, to NIS 44.19. Israel Corp., the holding company with stakes in chemicals and shipping, retreated NIS 141, or 3.8%, to NIS 3,570. WALL STREET Wall Street struggled to steady itself Tuesday, climbing back from an early plunge after the Federal Reserve cut interest rates in hopes of restoring stability to a faltering US economy. The Dow Jones industrials, down 465 points at the start of the session, recovered to a loss of 128 points. In the last hour of trading, the Dow was down 128.11, or 1.06%, at 11,971.19. The Dow was last below 12,000 in March 2007. The broader Standard & Poor's 500 index was off 14.42, or 1.09%, at 1,310.77, while the Nasdaq composite index fell 42.08, or 2.3%, to 2,297.94. EUROPE European stocks gained Tuesday as investors cheered a move by the US Federal Reserve to lower interest rates by 75 basis points and prop up the world's biggest economy. The Dow Jones Stoxx 600 Index surged 2.2% to 315.53 after earlier hitting a low of 296.21. The index had plunged 5.7% Monday and had registered its steepest daily percentage decline since the September 11, 2001, attacks on the US. In terms of national markets, the UK's FTSE-100 Index climbed 2.9% to 5,740.10. France's CAC-40 Index added 2.1% to 4,842.54. Germany's DAX Index lost 0.3% to 6,769.47. Stocks initially moved sharply lower as investors fretted over the prospect that a US recession would cause a worldwide economic slowdown and pare back corporate earnings. ASIA Stocks were sharply off in Asia, where Japan's Nikkei 225 index nose-dived 5.7% - its biggest percentage drop in nearly 10 years - to 12,573.05, a day after falling 3.9%. Australia's benchmark index sank 7.1%, its steepest one-day slide in nearly 20 years. Hong Kong's Hang Seng index, which slumped 5.5% Monday, finished down 8.7%. In China, the Shanghai Composite index lost 7.2% to 4,559.75, its lowest close since August. Indian Finance Minister P. Chidambaram urged investors to remain calm after trading in Mumbai was halted for an hour when the stock market there fell 10% within minutes of opening. The Sensex rebounded some to close down 5% after plunging 7.4% Monday. CURRENCIES The shekel climbed as much as 2.3% versus the dollar to 3.7185, the most since 1998. It was the best performer among 11 emerging-market currencies in Europe, the Middle East and Africa on Tuesday. The dollar fell the most against the euro in two months after the Fed announced an emergency cut in interest rates, making US fixed-income assets less attractive to international investors. The currency weakened against 14 of its 16 most actively traded counterparts, dropping the most against the New Zealand dollar since September and having its biggest decline against the pound in more than a month. The dollar dropped 1.1% to $1.4613 against the euro at 12:02 p.m. in New York from $1.4454 Monday. The dollar touched an all-time low of $1.4967 on November 23. Against the yen, the dollar rose 0.7% to 106.73 from 105.99 Monday. COMMODITIES Commodities fell to a one-month low, led by declines in copper and grains, on concern the Federal Reserve's emergency interest-rate cut won't prevent a recession from hurting demand for raw materials. Gold rallied. Gold rose as the weakening dollar boosted the appeal of the precious metal as an alternative investment. Gold futures for February delivery rose $8.40, or 1%, to $890.10 an ounce on the Comex. Oil futures dropped on mounting concerns that the US economy may be heading toward a recession that would dampen demand for crude. Light, sweet crude for February delivery fell $1.03 to $89.54 a barrel on the New York Mercantile Exchange; earlier, it had fallen as low as $86.11. Oil last traded that low on December 6. (News agencies)