Fears of an economic meltdown recede

European stock markets were beginning to show signs of recovering from Tuesday’s plunge triggered by fears that the terrorist attack on the US would lead to a recession.

As expected when trading resumed on the London Stock exchange the early trading was frantic as a severely depressed stock market saw first a dive and then a slow recovery due to bottom feeding.

There were still concerns that consumer confidence, vital to continued economic success, would be hit by the events of Tuesday.

The FTSE closed down 287 points on Tuesday, bottoming out at 4746. The day’s trading saw the largest one-day fall since the market crash in 1987, wiping £67 billion of share values.

Analysts warned cautiously that the full extent of the stock markets problems would not become apparent until the New York Stock Exchange re-opened. Trading on Wall Street is not expected to resume until at least Friday, but many consider that it is unlikely to re-open before Monday.

Currency traders have been asked by the US Federal Reserve to curtail trading on the dollar in a highly charged and volatile market.

World banks have vowed to maintain liquidity of the world’s financial operations amid fears that large transactions may be stalled due to cash-flow stagnation.

Traders at the London Stock Exchange observed a one-minute silence as a mark of respect for the thousands of people who lost their lives in the attack on the World Trade Center.

The major financial trade centre housed many of New York’s leading financial companies and top financial institutions.

Some companies are reported to have lost virtually all records and files for their American operations, and it will be many weeks before the full impact of this destruction becomes apparent. (SP)