Markets steady as banks pump in cash
Shares in London and on the Continent rallied today after the European Central Bank poured fresh funds into the credit markets.
The FTSE 100 index of leading shares clawed back 180.7 points to close at 6219.0, having crashed by more than 350 points in just two days at the end of last week, though Wall Street staged a late rally on Friday.
European markets were also as much as 2% higher after the ECB made another €48bn (£32.5bn) of emergency funds available to banks.
It followed a similar move by Bank of Japan this morning as central banks around the world look to prevent full-blown financial meltdown.
Stock markets tumbled last week as fears of a global credit crunch sparked by the collapse of the US subprime mortgage market spooked investors.
The ECB today said conditions were 'normalising' while Morgan Stanley said the stock market correction was over and upgraded its rating on European shares from 'neutral' to 'overweight'.
Morgan Stanley equity strategist Teun Draaisma said: 'There is much uncertainty and risks are high, and it is possible that markets fall further in the short-term, but the six-to-12-month risk-reward for equities is good.
'We may already be at the point of maximum bearishness and uncertainty-which by definition is the right moment to buy.'
Others in the City were less bullish, warning that further turbulence is on the way as the true extent of the credit crisis emerges.
David Jones of CMC Markets said: 'It would be naive to think the worst is behind us. It wouldn't be surprising to see the market test the 6000 barrier this week.'
The FTSE 100 is still well below its June peak of 6732, having dived 232 points in Friday's bloodbath - its heaviest fall for six years. Today's intervention by the ECB was its third in recent days. Central banks around the world last week pumped more than £150bn into the money markets.
America's Federal Reserve was today under pressure from Wall Street to cut interest rates to ease the credit crisis.
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