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European shares jump despite more massive falls in China | |
(about 4 hours later) | |
European shares have surged in Tuesday trading, despite another night of steep falls for China's market. | |
The FTSE 100 closed up 3% and Germany's Dax and Paris Cac both gained more than 4%. | |
European markets had opened higher but were were further boosted after China's central bank announced it was cutting interest rates. | European markets had opened higher but were were further boosted after China's central bank announced it was cutting interest rates. |
That followed two days of turmoil on China's stock markets. | That followed two days of turmoil on China's stock markets. |
On Tuesday, the main Shanghai Composite index closed down 7.6% at 2,964.97 points, extending Monday's losses. | On Tuesday, the main Shanghai Composite index closed down 7.6% at 2,964.97 points, extending Monday's losses. |
Stock markets in Lisbon, Madrid and Milan, all also made strong gains. | |
But Wall Street bucked the trend. Having initially surged all three main stock indexes in the US reversed sharply in the final hour of trading. | |
The Dow Jones index eventually closed 1.3% lower, while the S&P 500 dropped 1.4%. | |
"Today's move to cut interest rates... is certainly a step in the right direction," said Anna Stupnytska, global economist at Fidelity Worldwide Investment. | "Today's move to cut interest rates... is certainly a step in the right direction," said Anna Stupnytska, global economist at Fidelity Worldwide Investment. |
"But while this might help sentiment, it is not enough to reverse the ongoing slowdown in China's growth. Some stabilisation in activity is probably the best case scenario. A sharp rebound is unlikely," she added. | "But while this might help sentiment, it is not enough to reverse the ongoing slowdown in China's growth. Some stabilisation in activity is probably the best case scenario. A sharp rebound is unlikely," she added. |
The volatile market moves have raised speculation that the Bank of England may delay an interest rate rise. | The volatile market moves have raised speculation that the Bank of England may delay an interest rate rise. |
However, Paul Hollingsworth, UK economist at Capital Economics, said: "Although the UK has clearly been caught up in the recent meltdown in global financial markets, we doubt that it will knock the economic recovery off course. | However, Paul Hollingsworth, UK economist at Capital Economics, said: "Although the UK has clearly been caught up in the recent meltdown in global financial markets, we doubt that it will knock the economic recovery off course. |
"That said, it provides the more cautious members of the [Monetary Policy Committee] with another reason to hold fire on voting to raise interest rates." | "That said, it provides the more cautious members of the [Monetary Policy Committee] with another reason to hold fire on voting to raise interest rates." |