Markets jittery amid recession fear

Business

Global stock markets have seen mixed trading, with Wall Street jittery while European markets fell for a second day running and Tokyo suffered its worst loss in two decades. The falls in Asia and Europe on Thursday were considered to be a reaction to the record plunge on Wall Street a day earlier and fears of a global recession. US stocks rose marginally in the first half hour of trading, with the Dow Jones index up 1.25 per cent to 8,685.12. "Make no mistake though the overriding fear here is of a recession in the US spilling over to the rest of the world," John Terrett, Al Jazeera’s correspondent at the New York stock exchange, said. Terrett said that inflation figures released today - with the cumsumer price index remaining stable at 0.1 for September and August - meant that confidence was boosted pre-opening. "That's the first time that [inflation has remained stable] in more than two years. "It was because airline tickets are coming down in price, the price of automobiles are coming down, and fuel coming down as well." Europe's main stock markets fell heavily at the start of trading, with London and Frankfurt down five per cent. EU mandate There were concerns in Europe, where leaders have pushed for a co-ordinarted overhaul of the global financial system. Speaking at a two day summit in Brussels, Sarkozy said: "We do not have the right to miss this opportunity for reconstructing our system of finance for the 21st century." At the summit French President Nicolas Sarkozy was given a mandate by 27 Euro leaders to propose the overhaul to President George Bush at a meeting at Camp David on Saturday. Sarkozy said that a proposal to revamp the International Monetary Fund, big bonuses and currency reforms, as a precursor to an international summit in November. European state assistance was handed out on Thursday when the Swiss government announced that it would take a near 10 per cent stake - worth $5.2bn - in UBS, the Swiss banking giant. The Swiss central bank also lent UBS $54bn to transfer its non-liquid assets into a separate fund. The Swiss bank is looking to bolster its funds in the wake of the global economic crisis. Tens of millions of deposits have been withdrawn from the bank over the past weeks amid fears over the bank's stability. By midday (1047 GMT) the FTSEurofirst 300 index of the top European shares was down 2.6 per cent at 879.96. Markets down Gulf stock markets also fell at the start of trading on Thursday, led by the Dubai Financial Market, which dropped more than six per cent. Hong Kong share prices closed 4.8 per cent lower while share prices in South Korea, Singapore, Taiwan and New Zealand were also sharply lower. Tokyo's Nikkei stock index plunged 11.41 per cent by the close of trading, the biggest loss in two decades. Japan's benchmark index has lost more than 23 per cent this month. Taro Aso, the Japanese prime minister, put the losses down to the "insufficient" US bank bailout, a $700bn plan to secure American financial institutions. Aso told parliament that "since it [the bailout] was insufficient, the market is again falling sharply", reflecting investors' sentiment that the government intervention may not be enough to stave off recessions across the globe. Though financial rescue packages around the world have helped alleviate the pressures on the banking system, they will do nothing to prevent a serious economic slowdown. Concerns about the global economic outlook are clear also in the price of oil, which has fallen another $1.28 to $73.26, a new 13-month low.