Credit markets continue to trouble global markets

On Monday European equities fell sharply, responding to a 2% fall in the Dow Jones Industrial Average on Wall Street on Friday as credit market woes deepened. Asian stocks fell, extending a rout that wiped $2.66 trillion from global equities.

European equity markets bounced strongly on Tuesday, taking their lead from Wall Street's biggest daily advance since 2003.

On Wednesday European equity markets were higher for a second successive session, driven by strong corporate earnings in the insurance sector. The Bank of England indicated it will have to raise the benchmark interest rate once more as record oil costs and rising food prices keep inflation above its target for the next two years.

European equity markets were spooked on Thursday as BNP Paribas became the latest casualty of the US subprime mortgage market, forcing it to suspend three of its funds.

Tokyo shares closed higher, driven by gains in the shares of exporters and strong quarterly earnings for several companies.

On Friday European equities continued to flounder under the wave of credit troubles as the European Central Bank acted for a second day, along with Asian central banks to add liquidity to panicky markets.

Following its €94.8 billion cash injection on Thursday, the ECB said it would add money to the financial system over the weekend, aiming to "assure orderly conditions in the euro money market".

This article was compiled by Valletta Fund Management Limited, a member of the BOV Group. Valletta Fund Management, The Mall Offices, Level 6, The Mall, Floriana VLT 16. Freephone: 8007-2344. E-mail: infovfm@vfm.com.mt Website: www.vfm.com.mt VFM is licensed by the MFSA.