Europe markets steady after US dive

Europe’s panic-ridden stock markets held firm today despite another disastrous session on Wall Street.

The FTSE 100 Index, which is in danger of trading below the 5000 barrier for the first time since July last year, opened 40 points lower before recovering to reach positive territory.

There had been fears that the benchmark index could open as much as 300 points down after Wall Street’s Dow Jones Industrial Average fell by more than 5% last night and Asian markets suffered heavy falls.

London’s leading share index, which has lost nearly 1,000 points in the space of a month, yesterday posted four consecutive sessions of triple-digit losses for the first time in its 27-year history.

In Wall Street’s first day of trading after Standard & Poor’s downgrade of the US credit rating, the Dow Jones Industrial Average recorded its sixth-worst point decline in the last 112 years. The fall of more than 600 points came despite attempts by President Barack Obama to reassure markets.

Michael McCarthy, chief strategist at Sydney-based stockbroker CMC Markets, said the struggling US economy was quickly losing momentum.

“We’re clearly in fear territory. The major driver here seems to be weakness in the US economy. There are fears that it’s starting to stall and, if that’s the case, the whole global growth scenario could fall over.”