Stocks Open Higher on Wall Street

Real Estate Agent with Coldwell Banker Coastal Rivers Realty


Tuesday, October 21, 2008

Stocks in New York followed shares in Europe and Asia higher on Monday, after a new round of government actions to backstop financial institutions and as investors watched for more signs that credit markets are loosening up.

European stocks rallied after the Dutch government announced late Sunday that it would inject about $13.4 billion of new capital into ING, one of the country's largest financial institutions.

Asian financial markets gained after the South Korean government said over the weekend that it would guarantee as much as $100 billion in foreign debt held by its banks and would pump an additional $30 billion into the banking sector. The South Korean currency, the won, and the stock market had come under increasing strain last week because of the exposure of Seoul's big banks to foreign-currency loans.

In New York, the Dow Jones industrial average opened slightly higher, up about 65 points in early trading. The broader Standard & Poor's 500-stock index was up about about 1.3 percent. One crucial indicator, overnight lending of banks, also eased somewhat overnight.

Crude oil futures for November delivery in New York trading rose $1.82 to $73.67 a barrel.

In early afternoon European trading, the Amsterdam benchmark AEX index rose 2.3 percent, as shares of ING gained 23 percent. The DJ Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 1.75 percent. The FTSE 100 index in London was up 2.1 percent, the CAC-40 in Paris rose 1.3 percent, and the DAX in Frankfurt added 0.38 percent.

In Tokyo, the benchmark Nikkei 225 stock average rose 3.6 percent. The S&P/ASX 200 index in Sydney gained 4.3 percent, and the Straits Times index in Singapore rose 3.1 percent.

Late in Hong Kong trading, the Hang Seng index was up 4.3 percent. Stocks in Bombay rose 4.4 percent after the Indian central bank took the market by surprise with a full one-percentage point cut in its main rate, to 8 percent.

Nonetheless, the gains Monday were modest compared to the massive global selloffs of the past two weeks, and a sense of caution prevailed in the market. While measures of credit market liquidity have shown improvement since coordinated actions by the major industrialized countries last week, they remain uncomfortably high.

The so-called Ted spread, the gap between yields on three-month government securities and the rate that banks charge each other for loans of the same duration, was unchanged at 3.63 percentage points early Monday. That is down from the peak last week of more than 4.6 percentage points, but still far above the pre-crisis average of between 0.5 and 1.0.

And the London interbank offered rate, or Libor, the rate banks charge each other for three-month loans in dollars fell, by the most in almost nine months.

Meanwhile, economic data Monday from China provided new evidence that the global economy is in for a period of slower or declining growth. Growth in China's gross domestic product country slowed to 9 percent in the third quarter because of weak exports, a slumping real estate market and temporary restrictions imposed during the Olympics, marking the slowest expansion in five years.

Separately, the Bank of Japan cut its economic outlook for all of the country's nine regions for the first time, citing slowing exports and weak household spending.

The dollar was mixed against other major currencies. The euro rose to $1.3497 from $1.3409 , while the British pound rose to $1.7500 from $1.7281. The dollar rose to 102.19 yen from 101.68 and to 1.1356 Swiss francs from 1.1372 francs.

© The New York Times. All rights reserved. This article originally appeared in The New York Times.