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European stocks rise, shaking off Tuesday's woes and looking ahead to U.S.

European stocks rise, shaking off Tuesday's woes and looking ahead to U.S.

European stocks rose Wednesday, shaking off declines on U.S. stock indexes the previous day, as U.S. investors sought bargains.
Britain's benchmark FTSE index gained 0.5 percent to 6,132.2, while Germany's DAX climbed 0.1 percent to 7,439.18. France's CAC-40 added 0.8 percent to 5,520.02.
Asian markets ended lower, following the plunge in New York that stemmed from simmering concerns about global credit market turmoil. But they pared their losses as the day progressed, with Korean shares recovering nearly completely, suggesting a measure of investor confidence.
Japan's Nikkei 225 index closed down 1.7 percent after dropping as much as 2.8 percent during the day. Hong Kong's key index lost 1.5 percent after falling as much as 2.9 percent. And South Korea's benchmark finished just 0.2 percent lower after dropping as much as 3.1 percent.
The Asian markets took their cue from the decline on Wall Street, which saw the Dow Jones industrial average sink more than 280 points, or 2.1 percent, to 13,041.85 _ its biggest drop since Aug. 9. Investors were uneasy about whether the U.S. Federal Reserve will take the steps needed to prevent credit market problems from spreading further.
In the U.S., investors put aside worries about shrinking credit and its effect on the economy to scoop up bargains after the huge tumble a day earlier. The Dow Jones industrial average rose 133.72, or 1.03 percent, to 13.175.57. Broader stock indicators also jumped.
"Markets may be coming to the opinion U.S. interest rates are going remain unchanged," said Keith Bowman, an equity researcher at brokerage Hargreaves Lansdown.
Global markets have been volatile in recent weeks as rising defaults on U.S. subprime mortgages has hit some brokerages and hedge funds that held mortgage-backed securities and made banks less willing to lend money.
Worries about a slowdown in the U.S. economy _ a key Asian and European export market _ heightened after a report Tuesday said U.S. consumer confidence sagged in August.
"Everyone is scared. It's like walking in the dark because we have yet to get the full picture of the subprime loan problems," said Shoji Yoshikoshi, senior investment strategist at Mitsubishi Capital UFJ Securities Co. in Tokyo.
Investors in the U.S. were disappointed Tuesday that minutes from the Fed's last meeting Aug. 7 didn't discuss a cut in the benchmark federal funds rate. The meeting predated a number of actions taken by the central bank to try to alleviate market turbulence, including the Aug. 17 lowering of the discount rate, the interest the Fed charges banks to borrow money.
Yoshikoshi said share prices will remain volatile until mid-September or October. Traders are now investing in bonds in Japan, Europe and the U.S., considering them safer than shares, he said.
"But that is only temporary and once we get the full picture of the problems, investors will return to stocks," he said.
A stronger yen caused traders to dump exporters like Toyota Motor Corp. and Sony Corp., which fell 2.0 percent and 2.8 percent, respectively. The higher currency makes Japanese exports more expensive and less competitive overseas.
Samsung Electronics Co., South Korea's biggest corporation, fell 2.4 percent.
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Associated Press Writer Kozo Mizoguchi in Tokyo contributed to this report.


Updated : 2021-01-26 11:35 GMT+08:00