Shares rebound sharply from five-year low

The London share market has rebounded sharply from a period of freefall in early morning trading.

At one point it looked as though investors were prepared to abandon shares in favour of government bonds and other assets viewed as safe bets in time of war, but markets bucked this trend during a fierce turnaround in afternoon trading.

Led by a glimmer of hope from the massive US-quoted conglomerate General Electric, who announced an expectation of strong growth this year, stretched markets rebound from a general crash.

The FTSE-100 almost hit 4,200 points, but afternoon trading managed to break the morning’s vicious selling circle, fuelled by concerns about the future of airlines and spiralling insurance costs. Morning trading saw London’s share values fall over 7% to hit their lowest levels in five years, but the clawback petered out in later trading as shares slipped back again.

The FTSE-100 rose sharply at one point clawing back almost 300 points as mid afternoon trading saw share markets break free of an apparently relentless downward trend in both the UK and the US.

On Friday morning US investors woke up to stare into the abyss with share losses running at nearly $1.2 trillion following panicked trading on Thursday. A resumption of this situation at US opening triggered a further slump in UK markets as the market recycled heightened US fears across the board.

Depressed share values led analysts to write down growth forecasts for next year by at least 25%.

European markets, previously slightly more buffered from the slide, also demonstrated falls as fears of a global recession gathered weight.

The release of a leading German business climate report by the IFO economics institute further pressured shares. The report showed that the most recent future expectations on performance had slumped to a five-year low.

But in perspective, the day’s 7.2% fall on the FTSE-100 was some way short of the 1987 stock crash that bottomed out at almost 11% on one day’s trading. (SP)