Europe rallies amid economic gloom

European and Asian markets recover slightly despite fears of global recession.

    Asian and European stocks have rebounded 
    but global recession fears persist [EPA]

    Nadim Baba, reporting for Al Jazeera from the London Stock Exchange, said there were gains but that there were also major drops on Thursday.

    "There is a lot of volatility at the moment, and it is being created by hedge funds which represent some of Europe's richest individuals," he said.

    "Their priority is making quick money for their clients, they need cash quickly... This is driving the markets down and is creating further instability."

    Shares' surge

    Italian bank UniCredit jumped 10 per cent after Libyan investors said they held 4.2 per cent of the group.

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    Intesa SanPaolo and HSBC gained 3.2 and 2.7 per cent respectively.

    "The sole intelligent thing is to remain on the sidelines and not make any huge bets," Thierry Lacraz, a strategist at Swiss bank Pictet in Geneva, Switzerland, said.

    "The global economic environment is still very negative, especially in the United States, where we've seen a dramatic drop in industrial production."

    But he added that falling oil prices would boost sectors like retail, and the reduction in interbank rates would be positive for October.

    In Asia, Japanese stocks rebounded on Friday from a historic fall the previous session as positive sentiment regained some momentum following strong overnight gains on Wall Street.

    Still, market sentiment remained cautious amid continuing concerns about the financial crisis and prospects of a worldwide recession.

    'Undervalued'

    "Investors are seeing stocks undervalued now, but they're still scared of the downside," Tomochika Kitaoka, strategist with Mizuho Securities in Tokyo, said.

    "So they are buying into relatively safe stocks."

    Japan's benchmark Nikkei 225 stock average advanced 235.27 points, or 2.78 per cent, at 8693.82.

    On Thursday, it had plunged 11.4 per cent, its biggest drop since 1987.

    Investor confidence remained fragile elsewhere in Asia. Sydney ended down 1.1 per cent and Seoul lost 2.7 per cent, while Shanghai rose 1.08 per cent. Hong Kong share prices dived 4.4 per cent, tumbling in late trade as investor confidence drained from the market.

    Kevin Rudd, the Australian prime minister, announced an emergency meeting with the country's top business leaders on Friday to tackle the threat of global recession.

    Just days after announcing a $7.3bn stimulus package, Rudd said he would consult major mining, software and finance leaders to hear their views on what else could be done to mitigate the "very, very tough time ahead".

    SOURCE: Al Jazeera and agencies


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