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| Stock markets fall back despite G20 reassurance | Stock markets fall back despite G20 reassurance |
| (40 minutes later) | |
| European shares have fallen further after Thursday's slump as investors continue to worry about the outlook for the global economy. | European shares have fallen further after Thursday's slump as investors continue to worry about the outlook for the global economy. |
| After opening higher, the main indexes in the UK, France and Germany all fell by between 1.5% and 2.5%. | After opening higher, the main indexes in the UK, France and Germany all fell by between 1.5% and 2.5%. |
| The falls came despite reassurances from the G20 that it was ready to take action to stabilise markets. | The falls came despite reassurances from the G20 that it was ready to take action to stabilise markets. |
| Thursday's slump was sparked by a Federal Reserve warning on Wednesday about the outlook for the US economy. | Thursday's slump was sparked by a Federal Reserve warning on Wednesday about the outlook for the US economy. |
| Gloomy comments about weak global growth from the International Monetary Fund (IMF) and the World Bank knocked sentiment further. | Gloomy comments about weak global growth from the International Monetary Fund (IMF) and the World Bank knocked sentiment further. |
| On Thursday, IMF head Christine Lagarde said the global economic situation was entering a "dangerous place", while World Bank president Robert Zoellick said he thought the world was in a "danger zone". | On Thursday, IMF head Christine Lagarde said the global economic situation was entering a "dangerous place", while World Bank president Robert Zoellick said he thought the world was in a "danger zone". |
| Meanwhile, Greece has denied media reports it was contemplating defaulting on its debts, with creditors taking a 50% hit on Greek government bonds. | Meanwhile, Greece has denied media reports it was contemplating defaulting on its debts, with creditors taking a 50% hit on Greek government bonds. |
| Finance Minister Evangelos Venizelos said Athens was focusing on reducing its debt levels. | Finance Minister Evangelos Venizelos said Athens was focusing on reducing its debt levels. |
| "All other discussions, rumours, comments and scenarios which are diverting our attention from this central target and Greece's political obligation... do not help our common European task," he said. | "All other discussions, rumours, comments and scenarios which are diverting our attention from this central target and Greece's political obligation... do not help our common European task," he said. |
| 'Bold action' | |
| The IMF and World Bank comments, following the Fed's warning about "serious downside risks" to the US economy, helped to push global markets sharply lower on Thursday, with the main European indexes fell about 5%, while in the US the Dow Jones closed down 3.5%. | The IMF and World Bank comments, following the Fed's warning about "serious downside risks" to the US economy, helped to push global markets sharply lower on Thursday, with the main European indexes fell about 5%, while in the US the Dow Jones closed down 3.5%. |
| Overnight, Asian shares fell sharply, with South Korea's main Kospi index slumping 5.7% and Australia's ASX losing 1.6%. Japan's Nikkei was closed for a public holiday. | Overnight, Asian shares fell sharply, with South Korea's main Kospi index slumping 5.7% and Australia's ASX losing 1.6%. Japan's Nikkei was closed for a public holiday. |
| The European and US falls sparked the G20 to announce a commitment "to take all necessary actions to preserve the stability of banking systems and financial markets as required". | The European and US falls sparked the G20 to announce a commitment "to take all necessary actions to preserve the stability of banking systems and financial markets as required". |
| It said it would follow up this pledge with a "bold action plan" at the beginning of November. | It said it would follow up this pledge with a "bold action plan" at the beginning of November. |
| It has given little hint of what this action may be, but markets have long been calling for a substantial increase in the eurozone's communal bailout fund, the European Financial Stability Facility (EFSF), from its agreed level of 440bn euros ($596bn; £385bn). | |
| Many investors also want the eurozone to issue bonds guaranteed by every one of the 17-member nations - so-called eurobonds. However, a number of policymakers, particularly those in Germany, have resisted the idea. | Many investors also want the eurozone to issue bonds guaranteed by every one of the 17-member nations - so-called eurobonds. However, a number of policymakers, particularly those in Germany, have resisted the idea. |
| In July, European finance ministers proposed making the EFSF more flexible, allowing it to buy individual government bonds - which would bring down the cost of borrowing for heavily indebted nations - and to offer emergency credit lines to banks. However, the proposals have not yet been ratified. | In July, European finance ministers proposed making the EFSF more flexible, allowing it to buy individual government bonds - which would bring down the cost of borrowing for heavily indebted nations - and to offer emergency credit lines to banks. However, the proposals have not yet been ratified. |
| 'Drip feed' | 'Drip feed' |
| However, analysts say swift action is needed in order to soothe investors' jittery nerves. | However, analysts say swift action is needed in order to soothe investors' jittery nerves. |
| "Markets work on a second by second basis, while politicians seem to be working to a monthly calendar," Jeremy Stretch from CIBC told the BBC. | "Markets work on a second by second basis, while politicians seem to be working to a monthly calendar," Jeremy Stretch from CIBC told the BBC. |
| He highlighted the "drip feed effect" of this week's IMF downgrade of global growth, the Fed's warning, the further comments from both the IMF and World Bank and Thursday's weak figures on eurozone private sector growth as undermining investors' confidence even further. | He highlighted the "drip feed effect" of this week's IMF downgrade of global growth, the Fed's warning, the further comments from both the IMF and World Bank and Thursday's weak figures on eurozone private sector growth as undermining investors' confidence even further. |
| Gerard Lyons at Standard Chartered Bank also highlighted political inertia, telling the BBC: "My biggest worry is that there is not the sense of urgency that there really needs to be to force policymakers to take decisive action". | Gerard Lyons at Standard Chartered Bank also highlighted political inertia, telling the BBC: "My biggest worry is that there is not the sense of urgency that there really needs to be to force policymakers to take decisive action". |
| The G20 is gathering later in Washington, a meeting which Jim O'Neill, chairman of Goldman Sachs Asset Management, suggested could mark the beginning of concerted action to tackle the debt crisis in Europe which is the cause of so much stock market volatility. | The G20 is gathering later in Washington, a meeting which Jim O'Neill, chairman of Goldman Sachs Asset Management, suggested could mark the beginning of concerted action to tackle the debt crisis in Europe which is the cause of so much stock market volatility. |
| "The thing that really brought the world to a better place in 2008 was genuine collective action involving both the developed and the developing world through the G20," he told the BBC. | "The thing that really brought the world to a better place in 2008 was genuine collective action involving both the developed and the developing world through the G20," he told the BBC. |
| "The fact that they're all there together in [Washington] DC this weekend should lay the framework for thoughts about quite significant actions... sometime between now or possibly at the November G20 in France." | "The fact that they're all there together in [Washington] DC this weekend should lay the framework for thoughts about quite significant actions... sometime between now or possibly at the November G20 in France." |