June 1, 2006	Thursday	Jumadi-ul-Awwal 4, 1427

LONDON, May 31: World stock markets recoiled on Wednesday on concern over high interest rates and inflation and weaker economic growth, but European shares firmed after recent sharp losses, dealers said.

Wall Street had faced steep falls overnight as investors were rattled by rising oil prices and a large drop in US consumer confidence figures, fuelling concerns over risks to inflation and growth.

As a result, Tokyo share prices dived by more than two per cent on Wednesday.

European shares also fell in initial deals on Wednesday — after slumping by about 2.4 per cent on Tuesday — but crept higher in early afternoon trading.

London’s FTSE 100 index of leading shares gained 0.47 per cent to 5,678.60 points, Frankfurt’s DAX 30 rose 0.40 per cent to 5,645.17 points and in Paris the CAC 40 index added 0.14 per cent to 4,900.73.

The DJ Euro Stoxx 50 index of leading eurozone shares rose 0.33 per cent to 3,602.75 points. The euro stood at 1.2866 dollars.

Stock markets in Frankfurt and London have erased all their 2006 gains over the past two weeks on aggressive selling linked to global economic worries.

The FTSE has fallen almost 7 per cent this month as global equity markets have slipped on rising worries about inflation, commodity costs, rising interest rates and flagging consumer confidence, analysts at the Sucden brokerage said.

US stocks were pummelled on Tuesday as a jump in energy prices and a weak outlook from retail giant Wal-Mart sparked concern that US consumers were retrenching in the face of higher fuel costs.

News of a shakeup at the top of US President George W. Bush’s economic team also created some uncertainty, and a broker downgrade of General Motors weighed on sentiment.

In Wall Street trading on Tuesday, the Dow Jones Industrial Average had tumbled by 1.63 per cent to 11,094.43 points, with all 30 blue chip shares declining.

The Nasdaq composite slid 2.06 per cent to close at 2,164.74 points, and the broad-market Standard and Poor’s 500 index slumped 1.58 per cent to 1,259.88.

After Tuesday’s steep falls on US markets, Japan’s key Nikkei index ended below 15,500 points on Wednesday for the first time in three months.

Tokyo’s benchmark Nikkei-225 index lost 2.47 per cent to finish at 15,467.33 points — the lowest closing level since February 20.

Financial markets in Hong Kong, Seoul and Taiwan were closed for public holidays on Wednesday.

Prior to plunging, world stock markets had struck multi-year high points during the first half of 2006 amid healthy company earnings, positive data and takeover news.—AFP