The London stock market steadied today as traders attempted to digest yesterday’s dramatic efforts to tackle the global financial crisis.
The FTSE 100 Index was more than 1.5% higher after interest rate cuts in South Korea, Hong Kong and Taiwan fuelled a modest recovery for Asian markets.
Recession fears caused London’s blue-chip index to plunge more than 5% on Wednesday, despite the Government’s bail-out of the banking industry and a 0.5% cut in the Bank of England base rate to 4.5%.
The fall wiped £57bn (€71.7bn) from leading stocks and sent the top-flight index crashing to 4366.7 – its lowest close since August 2004. The FTSE also fell 7.8% on Monday – its biggest one-day percentage fall since Black Monday in 1987.
But the Treasury’s rescue plan boosted banking shares today, with HBOS and Royal Bank of Scotland up 16% and 19% respectively.
However, CMC Markets dealer Matt Buckland warned that markets were likely to remain volatile.
He said: “There’s so much uncertainty as to what happens next and such a great reliance on seeing those interbank rates come down that until we see any real progress here, normality in equity markets does still seem to be some way off.”