World markets rise despite G20 tensions

DESPITE serious tensions prior to today’s G20 summit meeting in London world markets kicked off a new quarter yesterday with strong gains in Japan and losses in Europe.

Last month saw the best one-month gains in global shares prices since December 1999.

Ireland bucked the downward European trend yesterday and shares in Dublin were over 3.5% at the close of trading.

AIB, Bank of Ireland and Irish Life & Permanent all recorded strong gains with AIB up an impressive 19% to 72 cents.

The gains were made despite great uncertainty about what today’s G20 summit would achieve.

From an Irish perspective we should be hoping that an agreement to a further major funding stimulus will be agreed on, said Davy Research economist Rossa White.

Alan McQuaid of Bloxham Stockbrokers said it was important that global trade was not interfered with and he said a clear statement decrying protectionism would be reassuring not just from an Irish perspective but for other economies fearful that the US or other nations might put up trade barriers.

“What we need now is a sharp increase in global trade to get the world economy moving again,” said Mr McQuaid.

Last night US President Barack Obama and British Prime Minister Gordon Brown pleaded with other leaders to show a united front in delivering the global economy from its worst recession since World War II.

“We can only meet this challenge together,” President Obama said.

“All of us here in London have the responsibility to act with a sense of urgency.”

At the top of the G20 agenda is to produce a common regulatory framework to put a check on hedge funds, derivatives trading, executive pay and risk-taking by financial firms.

A key sticking point is how much more funding should be pumped into the global economy to deliver it from the current recession.

Nicolas Sarkozy has already threatened a walk out if strict regulatory guidelines are not agreed.

German Chancellor Angela Merkel said she was travelling to London with a mixture of confidence and concern.

Speaking in Berlin before flying to London yesterday she said the G20 may be trying to “suppress the problems and paint things in a brighter light than they are”.