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Europe stocks teeter on knife-edge Shares in disarray over China crisis
(35 minutes later)
European stock markets have edged back into positive territory, as fears of a China-led economic downturn persist. Wall Street shares have opened sharply higher, with the Dow Jones nearly 2% up, after losing ground on Tuesday.
London's FTSE 100 was 0.03% higher in afternoon trade, with markets in Paris and Frankfurt up by similar amounts. At the same time, European stock markets have edged back into negative territory, as fears persist of a China-led economic downturn.
In Tuesday's session on Wall Street, the Dow Jones index rallied at first, but dropped sharply at the close. London's FTSE 100 was 0.3% lower in afternoon trade, with markets in Paris and Frankfurt up by similar amounts.
Experts expect market volatility to continue at least until the Federal Reserve next meets in September to set US interest rates. Experts expect more market volatility until the Federal Reserve meets in September to set US interest rates.
"Until we get September out of the way, I think markets will continue to be choppy," said Michael Hewson, chief market analyst at CMC Markets."Until we get September out of the way, I think markets will continue to be choppy," said Michael Hewson, chief market analyst at CMC Markets.
"These are the sorts of swings that we last saw in 2008," he added."These are the sorts of swings that we last saw in 2008," he added.
Because of the wild market swings in global markets, Mr Hewson said he did not expect a rate rise out of the US next month, because of the central bank's mandate to maintain financial stability.Because of the wild market swings in global markets, Mr Hewson said he did not expect a rate rise out of the US next month, because of the central bank's mandate to maintain financial stability.
"I think they would be absolutely bonkers to raise rates now," he said."I think they would be absolutely bonkers to raise rates now," he said.
Bad news aboundsBad news abounds
Oil and metals prices were also under pressure, with Brent crude close to six-year lows.Oil and metals prices were also under pressure, with Brent crude close to six-year lows.
"There doesn't seem to be a host of good news out there at the moment," said Brenda Kelly, head analyst at London Capital Group,"There doesn't seem to be a host of good news out there at the moment," said Brenda Kelly, head analyst at London Capital Group,
She said she expected more big market swings on Wall Street later on Wednesday.She said she expected more big market swings on Wall Street later on Wednesday.
The recent global stock market rout began in China, where the benchmark Shanghai Composite has lost about 16% of its value this week.The recent global stock market rout began in China, where the benchmark Shanghai Composite has lost about 16% of its value this week.
On Wednesday, the Shanghai index fell 1.27% to 2,927.29, after veering in and out of negative territory.On Wednesday, the Shanghai index fell 1.27% to 2,927.29, after veering in and out of negative territory.
China contagionChina contagion
On Tuesday, China's central bank cut its key lending rate by 0.25 percentage points to 4.6% in a bid to calm stock markets after the past days' turmoil.On Tuesday, China's central bank cut its key lending rate by 0.25 percentage points to 4.6% in a bid to calm stock markets after the past days' turmoil.
The dramatic losses and volatility in China have shattered investor confidence and led to sharp falls in Asia and the US over the past several sessions.The dramatic losses and volatility in China have shattered investor confidence and led to sharp falls in Asia and the US over the past several sessions.
The interest rate cut was the fifth by the People's Bank of China since November last year.The interest rate cut was the fifth by the People's Bank of China since November last year.
The move is aimed at boosting China's growth long-term, rather than having an immediate impact on investors.The move is aimed at boosting China's growth long-term, rather than having an immediate impact on investors.
Given China's central role in world trade, a slowdown in the world's second-largest economy would be likely to reverberate around the globe.Given China's central role in world trade, a slowdown in the world's second-largest economy would be likely to reverberate around the globe.
A rate cut will make it cheaper for banks to borrow from the central bank and will in turn make it easier for businesses and private people to borrow money from those banks.A rate cut will make it cheaper for banks to borrow from the central bank and will in turn make it easier for businesses and private people to borrow money from those banks.
Analysis: Robert Peston, BBC business editorAnalysis: Robert Peston, BBC business editor
In some ways I thought yesterday's events on markets were if anything more disturbing than Monday's global rout.In some ways I thought yesterday's events on markets were if anything more disturbing than Monday's global rout.
Because if share-price gains could not hold after the significant monetary easing by China's central bank, then mistrust about the true state of the world's second largest economy (actually the number-one economy on the purchasing-power-parity measure of GDP) has become very pronounced indeed.Because if share-price gains could not hold after the significant monetary easing by China's central bank, then mistrust about the true state of the world's second largest economy (actually the number-one economy on the purchasing-power-parity measure of GDP) has become very pronounced indeed.
And another thing, the Chinese interest rate cuts will exacerbate the phenomenon that has caused so much stress in so many different global markets, from commodities, to foreign exchange, to stocks and bond - the fall in the Chinese currency, the RMB, since it was allowed by Beijing to float more freely on 11 August.And another thing, the Chinese interest rate cuts will exacerbate the phenomenon that has caused so much stress in so many different global markets, from commodities, to foreign exchange, to stocks and bond - the fall in the Chinese currency, the RMB, since it was allowed by Beijing to float more freely on 11 August.
Read more from our experts:Read more from our experts:
Robert Peston: China's woes and a still flawed global economyRobert Peston: China's woes and a still flawed global economy
Duncan Weldon: What next for the global economy after China market woes?Duncan Weldon: What next for the global economy after China market woes?
Andrew Walker: How the China share slump affects the rest of the worldAndrew Walker: How the China share slump affects the rest of the world
Karishma Vaswani: China counts cost of Black MondayKarishma Vaswani: China counts cost of Black Monday
Read more: The six Cs of the China stock slumpRead more: The six Cs of the China stock slump
The stocks fall in facial expressionsThe stocks fall in facial expressions
Optimism elsewhereOptimism elsewhere
Elsewhere in Asia, the region's largest index, Japan's Nikkei 225 finished 3.2% higher on Wednesday at 18,376.83 points.Elsewhere in Asia, the region's largest index, Japan's Nikkei 225 finished 3.2% higher on Wednesday at 18,376.83 points.
The Nikkei's gains come after a painful week for the Tokyo index, which had shed more than 8% in the past two sessions.The Nikkei's gains come after a painful week for the Tokyo index, which had shed more than 8% in the past two sessions.
South Korea's Kospi index was also in positive territory, closing 2.6% higher at 1,894.29 points, while in Australia, the S&P/ASX 200 finished 0.7% up at 5,172.80.South Korea's Kospi index was also in positive territory, closing 2.6% higher at 1,894.29 points, while in Australia, the S&P/ASX 200 finished 0.7% up at 5,172.80.