US stocks rebound slightly after brutal week

The Federal Reserve warned earlier this week that the American economy is in significant difficulty [Reuters]

US stocks have closed a brutal week on a quiet note.

The market rose slightly Friday after bouncing between gains and losses. Worries about the economy again pounded copper, gold and other commodities.

The Dow Jones industrial average rose 38 points, or 0.4 per cent. The Dow fell 6.4 percent for the week, its biggest drop since October 2008. The S&P 500 index rose 0.6 per cent, to 1,136. The Nasdaq rose 1.1 per cent.

Investors were watching developments about Europe where finance ministers from 20 countries pledged to take “all necessary actions to preserve the stability of the banking systems and financial markets”.

In Europe, France’s CAC-40 was down 0.8 per cent while the DAX in Germany was 1.3 per cent lower. The FTSE index of leading British shares fell 0.6 per cent.

The worries are piling up for investors: a US Federal Reserve warning earlier this week that the American economy is in significant difficulty, a raft of downbeat European and Asian economic indicators, and the continued concern over Greece’s debt.

‘Rigid strategy’

“The markets are eagerly awaiting a resolution or at the minimum, a more rigid strategy to reduce Greece’s debt liabilities,” said Giles Watts, head of equities at City Index.

Bank stocks have led the way down in recent days as investors fret over their potential exposure to the debts of Greece. Those fears have become more acute as the markets increasingly price in the likelihood of a Greek default.

Athens has had a series of meetings with its creditors this week to try to avoid that, but it’s unclear whether it will be able to dig itself out of its debt hole, even with the help of billions from the European Union and the International Monetary Fund.

Even the normally tight-lipped head of the French market authority, AMF, told France Inter radio Friday that “the situation is very, very worrying. We are in a worldwide situation of crisis”, pointing to debt in Japan, “imbalances” in the United States, and Europe’s sovereign debt troubles.

“We must take urgent measures on the international level,” said Jean-Pierre Jouyet.

Asian drops

Earlier in Asia, Hong Kong’s Hang Seng fell 1.4 per cent to after losing nearly 5 per cent the day before. Australia’s S&P/ASX 200 index fell 1.6 per cent to 3,903.20.

South Korean shares took a large hit, with the Kospi tumbling 5.7 per cent. Mainland China’s Shanghai Composite Index lost 0.4 per cent. Japan’s market was closed for a holiday.

Oil prices were down again alongside equities with benchmark crude falling $1.43 to $79.08.