Jittery markets slide down again
Stock markets in Europe and the US have tumbled again, a day after a Federal Reserve pledge to keep extremely low interest rates for two more years temporarily calmed investors' jitters.
An initial US surge continued into Asian and European trading sessions, although traders remained nervous after the market turmoil of recent weeks, which has sent many global markets officially into bear market territory - falling 20% from recent peaks. That nervousness became more acute as the US open loomed and European markets gave up all their earlier gains.
"So far, panic has eased but fear remains," said Kit Juckes, an analyst at Societe Generale.
Over the past few weeks, markets have suffered a severe reverse amid worries over the US economic recovery and the country's debt situation in light of a protracted debate in Congress to get the debt ceiling lifted. That contributed to last weekend's announcement by Standard & Poor's to downgrade the US's credit rating for the first time ever.
And in a sharp reversal of opinion, economists now believe there is a greater chance of another US recession.
The other major market concern is Europe's debt crisis. Investors have grown increasingly worried that Italy and Spain could become the next European countries to have trouble repaying their debts. Greece, Ireland and Portugal have already received bailout loans because of Europe's 21-month-old debt crisis.
The fears have pushed investors to shun Spanish and Italian bonds, which have led to higher yields and even higher borrowing costs for the two countries.
Earlier in Asia, the Shanghai Composite Index rose 0.9% to 2,549.18 and the smaller Shenzhen Composite Index gained 1.4%. Indexes in Taiwan and India also gained. Hong Kong's Hang Seng jumped 2.3% to 19,783.67.
Japanese stocks underperformed somewhat as investors continued to fret over the export-sapping appreciation of the yen.
Japan's Nikkei 225 index climbed 1.1% to close at 9,038.74 as the dollar headed near to post Second World War lows against the yen.