Property, Mortgage & Insurance News from the Best Deal 4 U

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Rate cut hope lifts global shares

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Thursday, October 30, 2008 10:03:38

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The UK's FTSE 100 index closed up 8.05%, and France's Cac 40 added 9.23%.

After European markets closed, the US Federal Reserve cut its key interest rate from 1.5% to 1%.

But in New York, the Dow Jones and S&P were down slightly after a volatile day of trading, with only the Nasdaq edging into positive territory.

At close of trade in Wall Street, the Dow Jones was down 0.82%, or 74.16 points, at 8990.96. The S&P 500 was down 1.11%, or 10.42 points, at 930.09 and the Nasdaq was ahead 0.47%, or 7.74 points, at 1657.21.

It follows an 11% jump on the Dow on Tuesday.

Earlier stock markets across Europe climbed higher, as indexes rose 9.4% in Madrid, 9.9% in Milan and 9.1% in Amsterdam.

Big bank stocks were among the day's top winners. Shares in Spanish lender Santander, the eurozone's largest bank by market capitalisation, rose 14.3%. Swiss banking giants UBS and Credit Suisse rose 15.2% and 11.4% respectively.

Germany's leading Dax index bucked the upward trend, however, closing down 14.8 points, or 0.3%, after a turbulent day's trading, during which shares in Volkswagen fell 45.3%.

Rate cuts

Many analysts expect the Bank of England and European Central Bank to follow the US lead and cut rates next week.

UK interest rates are currently at 4.5%, after the Bank of England cut them by half a percentage point earlier this month in a co-ordinated move with both the Fed and European Central Bank (ECB).

The ECB's interest rate for the eurozone stands at 3.75%.

Tuesday's jump in share prices on Wall Street inspired a 7.7% rise in Japan's Nikkei index on Wednesday, with the Japanese market also lifted by hopes of a rate cut in Tokyo.

"The optimism is fuelled by the prospect of rate cuts," said Singapore-based investment analyst Nicole Sze of Bank Julius Baer & Co.