Wall Street pulled back from strong early gains as global stock markets rebounded from heavy losses yesterday on hopes for fresh cuts in interest rates and an easing of the credit crisis.
The Dow Jones had added 0.4% to % to 8,210 in the first trades after Monday's late sell-off that pushed blue chips down more than 200 points. The Nasdaq gained 1.2% to 1,184.
European shares rose to break a five-day losing streak, helped by a surge in Volkswagen and sharp gains in heavyweight oil group BP after quarterly profits jumped.
The Frankfurt DAX had jumped 6.9% to stand at 4,633 by 2.50pm, with shares in Volkswagen roaring 33% higher, following its 146% surge yesterday. The Paris CAC was up 1.2% to 3,105.
London's FTSE gained 2.1% to stand at 3,934, with BP up over 5% after it reported a 148% rise in third quarter profits.
Dublin's ISEQ index reversed early gains to stand 2.2% lower at 2,509 by 2.50pm. The banks were mixed - shares in Bank of Ireland were up 2% to €1.41 while AIB lost 1.6% to stand at €3.10. Anglo Irish Bank slipped another 28% to €1.02 after slumping 24% yesterday.
Irish Life and Permanent was up 8.5% to €1.65 after roaring ahead 400.
IL&P update boosts stocks
The boost came after IL&P gave an earlier than expected market update on the level of its exposure to three banks in Iceland.
Last week IL&P revealed it lent money to Iceland's three major banks, but failed to quantify its exposure.
Instead it said it would update the market next week in its interim management statement
But after a 30% fall in its shares yesterday and relentless selling last week, the company relented this morning.
Its figures show it has lost €96m to Icelandic banks. It said it can absorb any losses related to Icelandic banks without placing the bank's capital under strain.
This morning Ulster Bank said it expects the European Central Bank to reduce rates by 1.25 points due to the turmoil. Analysts expect the first of those cuts to happen next week.
Meanwhile, Asia's battered stock markets rallied this morning after several days of heavy losses as investors hunted for bargains despite continued worries about the ailing global economy.
Most markets around the region bounced back from an early sell-off. Hong Kong shares closed 14.4% higher, rebounding strongly after plunging 12.7% the previous day.
Tokyo ended with a gain of 6.4% as the yen fell sharply and investors hunted for bargains after the Nikkei index tumbled to a 26-year low. Seoul rose 5.6% and Shanghai firmed 2.8%.
