Markets in Europe rally as bank borrowing gets cheaper

AS EUROPEAN leaders travelled to Washington yesterday to meet US president George Bush, markets across Europe finished a volatile week on a positive note, as they clawed back some of the losses of the previous two days, and bank borrowing finally became cheaper as interbank rates declined.

Although the Irish market remained flat, 14 out of 18 European markets recorded gains and the Dow Jones Stoxx 600 put an end to its steepest two-day retreat when it advanced by 3.4 per cent to 213.37.

Intervention from European governments encouraged markets, although the shadow of recession still looms. In the UK, the FTSE 100 recovered from the five-and-a-half year low set the previous day when it closed up by 201.6 points, or 4.4 per cent, at 4,063.0 points, to end 3.3 per cent higher on the week.

Rebounding oil shares, boosted by recovering prices, as well as pharmaceutical stocks, led the recovery, while banks were broadly higher.

In Germany, the DAX finished the day up 3.4 per cent.

Markets benefited from short-term borrowing costs for banks falling for a fifth day yesterday.

The US market was also on course to finish the week on a high, as the SP 500 looked to extend its best weekly gain since 1982. It followed an avowal from investor Warren Buffett that he was going to buy US stocks for his personal account, on the premise that the market was likely to move higher before sentiment or the economy changed.