World markets in turmoil

WORLD markets saw another day of turmoil yesterday as investors reacted to the uncertain economic situation around the world.

A late recovery meant some of the losses suffered earlier in the week were recouped, but at one point it appeared that share prices would drop through the floor.

The FTSE 100 ended up 25 points, but had dropped well below 5,000 by around 160 points by mid-afternoon.

Similar turmoil was seen in the European markets with the German DAX at one point losing more than 200 points but ending up 32, and the French CAC also seeing a major fall before recovering to close up 28 points.

The late recovery appears to have been aided by a declaration by the finance ministers at the G20 summit in Washington “to take all necessary actions to preserve the stability of banking systems and financial markets as required”. However, some analysts were left less than persuaded by the declaration.

“The statement from the G20 last night may have taken the edge off the current bitter market sentiment, but the reassurances from the finance ministers lack substance,” said Jane Foley at Rabobank.

“Until politicians back their words with actions in respect to moving closer to a solution to the eurozone debt crisis, markets will continue to worry about a messy and painful outcome from the eurozone debt crisis.”