الرئيسية
Specialist Gregg Maloney, right, works on the floor of
the New York Stock Exchange Wednesday, Nov. 30, 2011. A move by the
world’s central banks to lower the cost of borrowing exhilarated
investors Wednesday, sending the Dow Jones industrial average soaring
490 points and easing fears of a global credit crisis similar to the one
that followed the 2008 collapse of Lehman Brothers. It was the Dow’s
biggest gain since March 2009. (AP Photo/Richard Drew)
By NATALIYA VASILYEVA, AP
MOSCOW (AP) — A rally on global markets stalled Thursday as
euphoria over major central banks' coordinated cut to borrowing costs
wore off and investors sought confirmation that European leaders will
next week deliver a long-term solution to the debt crisis.
Markets
had jumped on Wednesday when the central banks of Europe, the U.S.,
Britain, Canada, Japan and Switzerland made it cheaper for banks to
borrow dollars, helping them to operate smoothly at a time of tight
credit. China's central bank also acted to release money for lending and
shore up growth by lowering bank reserve levels for the first time in
three years.
Worries about Europe's financial system and the
European Central Bank's reluctance to intervene heavily in bond markets
have seen borrowing rates rise for European countries in recent weeks.
That raised fears of a global credit crunch of the type that plunged the
global economy into recession in 2009.
As a result of the
central banks' action, commercial banks in the EU and four other
countries will now be able pay less to borrow dollars, the currency of
international trade.
But analysts said that the decision might
only have a short-term effect and does nothing to solve the underlying
problem of an enormous government debt in Europe. Investors say the real
boost to the markets might come only if European leaders announce a
dramatic action at the summit on debt crisis next week.
"Until we
see some definitely agreed on and, when necessary, legislated
initiatives from Europe, optimism can be premature," said Ric Spooner,
chief market analyst at CMC Markets in Sydney. "Until we see that sort
of thing, there will be a ceiling on the rally."
European Central
Bank chief Mario Draghi on Thursday hinted the bank was ready to play a
bigger role in the resolution of Europe's debt crisis, but only after
the 17 euro economies align their budgetary policies more closely.
After
huge gains this week, Britain's FTSE 100 inched up another 0.4 percent
to 5,528.33 in morning trading. But Germany's DAX fell 0.4 percent to
6,064.73 and France's CAC-40 was 0.3 percent lower at 3,145.55.
Although
the stock rally waned, bonds continued to perform strongly on hopes
that European leaders will agree to some new support for weaker states,
such as Italy, in exchange for tighter controls over their spending.
Bond
yields in the secondary market — where the bonds are traded freely once
they are issued — dropped for most eurozone countries. Italy's key
10-year bond yield fell sharply to 6.81 percent from 7.30 percent the
day before, a sign that investors are more hopeful it will be able to
handle its debts.
The improvements were helped by successful bond
auctions in Spain and France. Although Madrid had to pay higher
interest rates on its borrowings, demand for its bonds was strong.
France saw its borrowing rates drop in a sale of 10-year and 15-year
bonds.
Wall Street was heading for mild losses on the open. Dow
Jones industrial futures shed 0.2 percent to 12,017.00 and S&P 500
futures were down 0.3 percent lower at 1,242.60.
The central
banks' move sent the Dow Jones industrial average soaring 490 points on
Wednesday, or 4.2 percent, its biggest gain since March 2009 and the
seventh-largest of all time. The Standard & Poor's 500 closed up 4.3
percent.
In currencies, the euro gained 0.4 percent to $1.3495 Thursday morning in London. The dollar rose to 77.64 yen from 77.56 yen.
Asian
markets earlier posted sharp gains as they caught up with the news of
the central banks' intervention. Japan's Nikkei 225 index jumped 1.9
percent to close at 8,597.38. South Korea's Kospi surged 3.7 percent to
1,916.18 and Hong Kong's Hang Seng vaulted 5.6 percent to 19,002.26.
Benchmarks
in Australia, India, Singapore and Taiwan all rose more than 2 percent.
In mainland China, the benchmark Shanghai Composite Index gained 2.3
percent to 2,386.86.
The action late Wednesday by the Chinese
central bank signaled a key change in monetary policy and pushed shares
of Chinese banks up.
By easing reserve requirements, the Chinese
central bank made available some 350 billion yuan ($55 billion) that
otherwise would have been locked up in reserves.
In energy
trading, benchmark crude for January delivery was up 25 cents to $100.61
a barrel in electronic trading on the New York Mercantile Exchange. The
contract rose 57 cents to settle to $100.36 on Wednesday.
___
Pamela Sampson contributed to this report from Bangkok.