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Global stock markets enjoy rally Global stock markets enjoy rally
(about 6 hours later)
World stock markets regained some ground on Tuesday following five days of losses. World stock markets saw an upturn after five days of losses, with European markets ending the day higher.
US markets opened higher and London's FTSE 100 index was up 64.8 points at 6,123.5 by early afternoon. Other European markets also rose. The Dow Jones rose 0.9% in afternoon trade, after London's FTSE 100 index ended 1.3% up, Germany's Dax added 0.9% and France's Cac closed 1% up.
Japan's Nikkei index, which had lost 8% of its value in the past five sessions, climbed 1.2%, while the Bombay Stock Exchange closed 2.3% higher at 12,697. The upturn echoes rises in Asia and comes a week after China's biggest market drop in a decade, which triggered falls globally.
However, analysts said that not too much could be read into the rally. But analysts warn that volatility in the market remains a concern.
'Damage done'
Market sentiment remains tentative and it is going to take something substantially positive to turn confidence around David BrownChief economist, Bear Stearns
"Markets are still not out of the woods yet," said David Brown, chief economist with Bear Stearns, in a report.
"Market sentiment remains tentative and it is going to take something substantially positive to turn confidence around."
US economic data released on Tuesday showed factory orders had slowed in January, with durable goods orders seeing their biggest drop in more than six years.
Other data showed US productivity was down in the last three months of 2006.
Together both sets of data showed the world's biggest economy was slowing, fuelling fears over a wider contraction.
Rebound
By mid-afternoon the benchmark US Dow Jones had added 0.9% or 107 points to 12,157.8 while the Nasdaq climbed 1.24% to 2,369.67.
Earlier on Tuesday, Japan's Nikkei index, which had lost 8% of its value in the past five sessions, climbed 1.2%, while the Bombay Stock Exchange closed 2.3% higher at 12,697.
Analysts, however, had cautioned against reading too much into the rally.
"I believe it's a recovery bounce," said Andre Bakhos, president of Princeton Financial Group in New Jersey."I believe it's a recovery bounce," said Andre Bakhos, president of Princeton Financial Group in New Jersey.
"The hope is that it holds and a bottom can be built from it. But a lot of damage has been done, and it's like expecting an open-heart surgery patient to play tennis the next day.""The hope is that it holds and a bottom can be built from it. But a lot of damage has been done, and it's like expecting an open-heart surgery patient to play tennis the next day."
Rebound
The US Dow Jones index made a positive start to trading on Tuesday, climbing 84.9 points to 12,135.2.
Other US indexes also rose, with the tech-based Nasdaq index up 29.5 points at 2,370.2 and the S&P 500 index 13.2 points higher at 1,387.3.
Earlier in Japan, the Nikkei index had closed up 202.25 points at 16,844.5. A fall in the value of the yen helped to lift shares in companies such as Toyota which rely on overseas sales for much of their revenue.
Hong Kong's Hang Seng index climbed 2.1%, while the main indexes in Australia and China put on 2%.Hong Kong's Hang Seng index climbed 2.1%, while the main indexes in Australia and China put on 2%.
The price of oil also rallied, adding more than $1 to climb above $61 a barrel.
Overvalued?Overvalued?
Equity markets have suffered heavy losses in recent days, after investors dumped stocks amid concerns that they were overvalued and that economic growth could slow.Equity markets have suffered heavy losses in recent days, after investors dumped stocks amid concerns that they were overvalued and that economic growth could slow.
The current stock slump was triggered last week by the biggest drop on China's market in a decade.The current stock slump was triggered last week by the biggest drop on China's market in a decade.
That fed into fears about the state of the US economy, at a time when many investors were questioning whether share prices had risen too far too quickly.That fed into fears about the state of the US economy, at a time when many investors were questioning whether share prices had risen too far too quickly.
Many of the world's top indexes and shares had climbed to levels not seen since the dotcom bubble burst in 2000.Many of the world's top indexes and shares had climbed to levels not seen since the dotcom bubble burst in 2000.