Wall Street's rebound breathes life into Europe

After weeks of haemorrhaging, Wall Street yesterday staged a triple-digit recovery, with investors buoyed not so much by news but by the absence of news.

Shares rebounded across the board with technology stocks coming off what analysts called an oversold market and with fund managers frantically buying after selling short on Friday.

At the close, the Dow Jones was ahead 213.21, or 2.55 per cent, at 9,687.42. The Nasdaq did better putting on 3.23 per cent or 48.55 to1,553.29, which the Standard & Poor's 500 was up 28.54 (2.83 per cent) at 1,035.81.

It was a welcome relief after four successive weeks of losses, during which the Dow Jones Industrial Index fell 8.5 per cent, the Standard & Poor's 9 per cent and the Nasdaq nearly 14 per cent, reflecting economic and international uncertainty.

The recovery in the US breathed life into battered European markets, with most coming back strongly late in the day, though the mood remained cautious.

Investors were cheered by a strong rebound on US markets in early trading, though that came too late to staunch hefty losses in Asia.

In Europe, investors were hunting bargains left from last week's slide, helping the pan-euro zone Euro Stoxx 50 index to surge by 4.52 percent to 3,192.92 points.

In London, the FTSE 100 index of leading shares gained 2.7 per cent to close at 4,756.8 points, while the Paris CAC 40 index soared 4.4 per cent to end the day above the 4,000-point level at 4,010.36 points.

The German DAX 30 index won back 3.98 per cent to 4,475.1 points.

The Irish market lagged its counterparts, recording only 0.18 per cent rise to 4,969.46, as late afternoon attention focused on the €3.7 billion bid to take Smurfit private.

After the volatility of recent days, analysts are hopeful that the market has reached a low and that stocks will be able to advance during the summer months.

The sell-off in recent weeks has been blamed on worries of a double-dip recession, loss of confidence in corporate accounting, earnings disappointments, weak economic data, and instability abroad, particularly in the Indian sub-continent.

Mr Rod Smyth, chief investment strategist of Wachovia Securities, said: "We believe the probability of a stock market rally is growing."

"Psychology is so depressed that any fundamental improvement - or even a lack of bad news - would be enough to ignite the stocks," Mr Arnold Berman, a strategist at SoundView Technology Group, told the Wall Street Journal.

The mood was more cautious in Europe.

Mr David Thwaites, BNP Paribas equity strategist, said: "We had such a sharp sell-off that gathered momentum at the end of last week that a bit of a technical bounce was always likely and I think that's what we're seeing at the moment."

The US dollar was stronger but it is expected to slide further after finance ministers from the Group of Seven industrialised nations avoided any discussion on the currency at its weekend meeting in Halifax, Nova Scotia.