Business News

European shares charge ahead after Wall Street rally (1st Lead)

Oct 14, 2008, 8:41 GMT

Frankfurt - European shares charged out of the gates Tuesday after US and Asian stocks rocketed up on a renewed sense of optimism triggered by coordinated action by governments around the world aimed at shoring up investor and economic confidence.

Indeed, European shares gained momentum as the day's trading unfolded. By midmorning, Europe's blue-chip Stoxx 50 had climbed 5.6 per cent to 2,423 points after fears last week of a deep and protracted recession resulted in a wave of panic selling.

Both industrial and banking stocks helped to power the rise in European shares with bourses in Madrid, London, Frankfurt, Paris, Milan and Zurich gaining about 4 per cent.

Shares in German mortgage lender, Hypo Real Estate, which emerged as an early prominent victim of the crisis, raced ahead by about 40 per cent in Tuesday trading.

Shares in emerging Europe also joined the rally with stocks in Warsaw climbing by 4.5 per cent and by 7.6 per cent in Prague. Moscow also shrugged off concerns about the economic outlook to jump 11.2 per cent.

Tuesday's jump in European stocks came in the wake of New York's Dow Jones Industrial Average chalking up its biggest one-day points gain in history Monday, rising 936.42 points, or 11.08 per cent, to close at 9,387.61.

This also helped to power solid gains for bourses across the Asian-Pacific region with Tokyo's Nikkei index closing up 14.2 per cent and shares in Hong Kong by more than 4.0 per cent in Hong Kong. The Tokyo share market was closed Monday.

Stocks in Sydney gained 3.7 per cent, underpinned by the Australian Government's announcement of a 10.4-billion Australian dollars (7.2 billion US dollars) economic stimulus package.

Adding to the buoyant mood on global markets were expectations that Washington was planning to follow the lead of European governments and outline plans for taking an interest in financial houses hit by the crisis.

Expectations that the raft of measures outlined by governments on both sides of the Atlantic might help to underpin economic confidence also resulted in oil prices firming again Tuesday, rising by 4.0 per cent to 84.32 dollars in European trading.

In addition, this helped to underpinned the euro, which edged up 0.3 per cent to 1.3668 dollars.