US market indices turbulent

US market indices turbulent
# 17 September 2008 09:15 (UTC +04:00)
Baku. Vugar Mustafayev - APA-Economics. The United States’ central bank, the Federal Reserve, is to lend up to $US85 billion to the troubled insurer AIG, reassuring a volatile Wall Street, which had already rallied on rumours of the bailout.
The bankruptcy of investment bank Lehman Brothers and fears that other big financial institutions might follow have rattled world markets, but US stocks rebounded on Tuesday - after their biggest drop in seven years - on growing optimism that US authorities would rescue AIG, the country’s biggest insurer.
The Federal Reserve says the rescue package is intended to save the insurer from a disorderly failure that could damage the global economy. Many economists believe the Federal Reserve had no choice but to step in.
The US government will take an 80% stake in the firm.
On Wall Street, the Dow Jones industrial average fell as much as 175 points on Tuesday after the Federal Reserve left interest rates unchanged at 2%, but later gained 141 points to close 1.3% higher.
US stocks dropped as much as 175 points and the value of the dollar rose, while prices for US government bonds held steady after the central bank’s decision.
The benchmark Dow rose 141.51, or 1.30%, to 11,059.02 at the close on Tuesday. However, broader stock indicators advanced. The Standard & Poor’s 500 index rose 20.90, or 1.75%, to 1,213.60, while the Nasdaq composite index rose 27.99, or 1.28%, to 2,207.90.
In London, the FTSE 100 index closed down 3.43 percent to 5,025.6, having been down more than four percent at one stage to breach support at 5,000 points for the first time since 2005.
In Paris, the CAC 40 shed 1.96 percent to 4,087.40 and in Frankfurt, the DAX was off 1.63 percent at 5,965.17, with both markets down more than three percent earlier in the day.
Elsewhere in Europe, losses were widespread, with some of the smaller markets among the worst hit.
In Russia, the main RTS stock market suspended trading after falling by more than 11.47 percent, a spokeswoman said, following a move by the number two Micex bourse to do the same.
The FTSEurofirst 300 index of top European companies also closed 2.6% lower at 1,091.38 points, adding to a 3.6% slide on Monday.
Japan’s benchmark Nikkei 225 index dropped 5% to a three-year low, shares in South Korea and Hong Kong shed almost 6% and Shanghai’s index fell by about 3%. Markets in Taipei and Singapore were also sharply down. Australia was down 1.39%.