European markets slide, Asian stocks lose momentum amid uncertainties over terror attack

Tuesday, September 18th 2001, 12:00 am
By: News On 6

LONDON (AP) _ European stocks finished lower Tuesday but a late rally sparked by a modest rise in U.S. shares cut the losses. A strong performance across Asia lost momentum, and some markets there fell into the red following last week's terrorist attacks in the United States.

Oil and gold both retreated, and the U.S. dollar was mostly lower against other major currencies.

Stocks declined on all major European markets despite of interest rate cuts by central banks around the world, including a quarter percentage point cut by the Bank of England at midday.

``The rate cut, at least in Europe, doesn't seem to have calmed nerves at all,'' Jennifer Guest-Cagirtekin, a European stock strategist at London brokerage Gerrard. ``There's not an awful lot of positive things you can hang on to.''

Reports that Afghanistan was preparing for a holy war against the United States sparked selling in many financial centers.

Investors appeared more concerned with possible military action against Afghanistan's ruling Taliban than with the series of confidence-building cuts in key interest rates that began Monday with the U.S. Federal Reserve's half-point reduction.

The European Central Bank followed with a similar cut, and the Bank of Japan dropped a key rate earlier Tuesday.

Leading British, French and German stock exchanges all rebounded slightly from earlier lows once Wall Street showed signs of stabilizing after Monday's plunge in U.S. shares.

The FTSE 100 index of British blue chips closed down 1.02 percent, or 50.20, at 4,848.70. The index had been down as much as 2.59 percent below Monday's close.

The CAC 40 index of leading French shares sank as low as 2.06 percent beneath Monday's close before rising to finish the day down 1.13 percent at 3,970.18.

The Xetra DAX index on Germany's Deutsche Boerse fell 0.94 percent to 4,194.85 in Frankfurt, after trading down as much as 2.66 percent earlier in the day.

On Wall Street, market indicators were up in early afternoon trading before fading in late dealings. The Dow Jones industrial average fell 17.30 to 8,903.40, according to preliminary calculations. The Nasdaq composite index fell 24.29 to 1,555.26 and the Standard & Poor's 500 index declined 6.01 to 1,032.76.

The Dow dropped 7.1 percent Monday in its biggest-ever point loss, while the Nasdaq tumbled 6.8 percent.

In Asia, Hong Kong's Hang Seng Index finished with a loss of 0.1 percent after giving up big early gains that came when the rest of the markets across the Asia-Pacific region were surging ahead.

In Tokyo, blue chips moved higher from the outset. The 225-issue Nikkei Stock Average finished up 175.47 points, or 1.9 percent, at 9,679.88. The Nikkei had climbed by 4.6 percent in the early afternoon, however, before retreating late in the session.

``I don't think we have seen the last of the falls either in Tokyo or elsewhere, so it is a very much nervous situation just waiting to crumble at any further bad news,'' said Noriko Hama, chief economist at Mitsubishi Research Institute in Tokyo.

Jitters hit the Tokyo market after a bomb threat prompted the evacuation of a downtown office building housing Citibank, J.P. Morgan and Nikko Salomon Smith Barney.

``The market has been treated fairly harshly and I guess we have some bargain hunters moving in,'' said Paul Lucas, an institutional adviser at the investment house Hartley Poynton in Sydney, Australia, where the All Ordinaries index finished up 1.8 percent but off of its earlier highs.

In oil markets, contracts of North Sea Brent crude for November delivery fell 71 cents to $27.67 a barrel. Trading was much less volatile than on Monday.

Gold closed in London at $287.50 bid per troy ounce, down from $289.50 Monday.

The U.S. dollar fell against most other major currencies in European trading. The euro was quoted at 92.07 cents, up from 91.76 cents Monday, while the dollar fetched 117.48 Japanese yen, down from 117.95 yen late Monday. The British pound was quoted at $1.4621, down from $1.4650.