World Markets Measured After Fed Rate Cut

European Stocks Make Modest Gains After U.S. Central Bank's Move To Revive Economy; Asian Markets Up Sharply

(CBS/ AP)  European markets closed only modestly higher Thursday as Wall Street reacted unevenly to the release of economic growth numbers, which caused uncertainty about the depth and length of the recession in the U.S. Asian shares were strongly up earlier.

The Dow Jones index of leading U.S. shares, which opened some 200 points higher, was up only 53.05 points in early afternoon trading in New York. Though the Dow ended Thursday trading up 190 points to close at 9,180, the earlier retreat put pressure on Europe's indexes.

The FTSE 100 index of leading British shares closed 49.11 points, or 1.2 percent, higher at 4,291.65, having been more than 100 points up earlier. FTSE heavyweight stocks BP PLC and Royal Dutch Shell weighed on the index too after oil prices slumped $2.42 to $65.08.

France's CAC-40 ended up 5.25 points, or 0.2 percent, at 3,407.82.

Germany's DAX fared better than the others, helped by a 12 percent rise in the share price of Deutsche Bank AG, after it reported higher-than-expected third quarter profits. The DAX closed 60.61 points, or 1.3 percent, higher at 4,869.30.

Though a smaller than anticipated contraction in the U.S. economy in the third quarter drew a relief rally on Wall Street, a more detailed assessment of the quarter, in particular the news that consumer spending fell at its largest rate since 1980, reinforced underlying concerns about the health of the U.S. economy.

The Commerce Department report showed that U.S. gross domestic product, or GDP, fell at a 0.3 percent annual rate in the July-September quarter. That was less of a drop than the 0.5 percent analysts expected. But it was the 3.1 percent quarterly decline in consumer spending that spooked investors and prompted the end of any relief rally on Wall Street.

"The economy ended Q3 much weaker than it began, even before the most extreme turmoil in global financial markets erupted in October," said Nigel Gault, chief U.S. economist at IHS Global Insight.

"We are now entering the harshest part of the recession," he added.

The world's stock markets were up earlier after the Fed's decision Wednesday to cut its benchmark federal funds rate a half-percentage point to 1 percent, its lowest level since 2004, and hinted that there may be more rate cuts to come.

"The cut is a signal that we're in this to make sure that it works and we're asking you to rely on us," Barron H. Harvey, dean of Howard University Business School, told CBS News.

Perhaps of more importance to the markets' early uptick was the Fed's decision to supply new lines of credit to the central banks of Brazil, Mexico, South Korea and Singapore to help those countries deal with the global credit crisis.

The Fed said it will provide up to $30 billion to each of the central banks. It is the latest in a series of "swap" arrangements where the Fed provides dollars in exchange for reserves of the other nations' currencies.

The International Monetary Fund also said Wednesday it is creating a new program to get money quickly to developing countries with strong economies that are facing cash crunches in the global financial crisis.

The combination of lower global interest rates, with the Bank of Japan possibly next to cut on Friday, and attempts to stabilize emerging markets, had helped markets recover, but concerns about the global economy are never far from traders' minds.

"We are staring down the barrel of a major global recession and the growing probability of deflation," said John Higgins, an analyst at Capital Economics.

"This is not an environment in which equities or other risk-assets are likely to flourish relative to government bonds," he added.

Asian markets closed sharply higher, with Hong Kong's Hang Seng index leading the charge, up 12.8 percent at 14,329.85. South Korea's key stock index soared a record 12 percent to 1,084.72 and Japan's Nikkei 225 stock average gained 10 percent percent to 9,029.76 as exporters like Toyota and Sony got a boost from the ongoing fall in the value of the yen.

Elsewhere, benchmarks in Australia, Singapore, Taiwan and the Philippines added 4 percent or more. Russia's two main indices were also up sharply.

Hong Kong's de facto central bank followed by cutting its key lending by the same amount as the Fed and Taiwan reduced its key interest rate by a quarter point. In Japan, speculation mounted that the central bank would cut its key rate, already at a low 0.5 percent, at a meeting Friday.

Before the Fed acted, China also lowered its rates by just over a quarter point. The Shanghai Composite index was up 2.9 percent.

Markets also took heart from an announcement that the Fed would temporarily supply new lines of credit worth up to $30 billion to the central banks of South Korea, Brazil, Mexico and Singapore to help relieve the global credit crisis.

In currencies, the dollar rose 0.8 percent to 97.91 yen, while the euro was 0.6 percent lower at $1.2884. Meanwhile, the pound was steady at $1.6351.

[b0bbytspin]

You know what I changed my mind about Obama! I think he will be better for national security and the economy!

Plus sarah palin $150,000.00 on clothes, most Americans could have bought a home for that amount!

Besides I think Sarah Palin is really a Terrorist

Breaking News: The Terrorist Group AKA Alaska Independent party Calling on Russia to help secede from the Union
www.chilitoz.com
Extremists Mark Chryson and Steve Stoll former leaders of the Alaska Terrorist group AKA Independence Party and friends of Sarah Palin are calling on Russia to help them gain independence from the United States.

Watch video of Sarah palin addressing The Alaska Terrorist Group also known as The Independence party. They are calling for a civil war against the mainland.
www.chilitoz.com

[lochlan-2009]

And this is going to accomplish what for any American who doesn''t have an ARM. It will help the banks pretty nicely, as they increase the rates on the meager loans they give. THis country is so corrupt.

Why haven''t the media tackled the real number 1 issue? (We all know why)


CORRUPTION!!!!!!