European stock markets rebound after initial slump

EUROPEAN stock markets fell sharply after yesterday’s explosions in London, but rebounded later in the day as investors’ fears about the long-term impact of the attacks receded.

London’s benchmark share index, the FTSE-100, suffered its biggest one-day fall since March 2003, which coincided with the American-led invasion of Iraq, and was down 4% in the immediate aftermath of the blasts as around €75 billion was wiped off share values. But the index bounced back as the day progressed and was down just 1.4% in later trading.

Insurance and travel-related stocks, such as airlines, saw the biggest falls. Hotel and leisure shares were also affected. British Airways fell by over 5% in early trading but recovered to limit losses to around 2%. Shares fell by an average of around 4% across the continent, with the German DAX, the main index on the Frankfurt stock exchange, and Paris’s CAC-40 both down. But they recovered and were trading 1.8% and 1.4% lower respectively at the close of trading.

American stock markets were less volatile but still showed signs of investor unease.

Wall Street’s Dow Jones index and the technology-focused NASDAQ were trading around 0.5% lower late yesterday.

Sterling tumbled to an 18-month low against the dollar and had its biggest drop in almost 17 months against the euro.