ECON - Dow bounces back

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BBC Thursday, 9 August, 2001, 17:30 GMT 18:30 UK Dow bounces back

Wall Street reversed its earlier losses

The Dow Jones Industrial Average, which includes 30 of America's biggest companies, staged a late recovery on Thursday to close up slightly, erasing earlier losses.

The earlier slide was prompted by a damning report on the health of the American economy - and was enough to crush a brief revival on the European markets.

London shares, which had attempted a lunchtime rally, closed 1.3% lower, with Paris stocks ending almost 2% down.

Germany's Dax index closed down 1.82%.

New York's Nasdaq, home of leading high technology stocks, closed down 0.69% after a listless day's trading.

The Dow closed up 0.05% at 10298.

Tech shares lead decline

In Europe, technology firms led the decline, with Energis losing almost 9% and, in Paris, Alcatel dropping 7.6%.

In Stockholm, shares in mobile phone maker Ericsson lost 4.6%, while stock in rival Nokia plunged 8%.

Earlier, the main Japanese Nikkei index closed more than 3% down, while markets in Hong Kong, Thailand, Indonesia, Malaysia and South Korea also lost ground.

Depressing data

The losses were prompted by a much-watched report from the US central bank, the Federal Reserve, on Wednesday showing that long-identified weakness in the American manufacturing sector might be spreading to other sectors.

The Federal Reserve report, the latest in the influential 'Beige Book' series, gave little hope of an upturn from a US economic growth rate of just 0.7% in the April-June quarter, the poorest performance in eight years.

The report, which collates information from the bank's 12 regional branches, was damning in its portrayal of the manufacturing sector.

"Manufacturing activity in nearly all sectors and regions declined further in recent months as producers adjusted to weak domestic and foreign demand and worked through accumulated inventories," the report said.

"Reports of reduced work hours, lost overtime... planned shutdowns, and layoffs were pervasive."

And it said that problems were not confined to manufacturers, with many areas "indicating declines in demand for office space and trucking and shipping services".

Retail sales, which had remained resilient and offered hope of a consumer-led recovery, were "sluggish and frequently below expectations," the report said.

-- Anonymous, August 09, 2001


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