- The Washington Times - Wednesday, September 24, 2008

LONDON (AP) — World stock markets were mixed Wednesday as Warren Buffett’s plan to invest at least $5 billion in Wall Street firm Goldman Sachs helped allay some fears about the world’s troubled financial sector. But uncertainty about a massive U.S. economic rescue plan persisted.

By afternoon in Europe, Britain’s FTSE 100 fell 0.13 percent, Germany’s DAX dropped 0.03 percent and France’s CAC 40 lost 0.24 percent.

Earlier in Asia, Japan’s benchmark Nikkei 225 index edged up 0.2 percent after languishing for much of the day in negative territory, while Hong Kong’s Hang Seng Index rose 0.5 percent. Stock indexes in mainland China, Australia and South Korea were higher, while Taiwan lost ground and Singapore finished flat.

In morning trading in New York, the Dow Jones industrial average fell 0.28 percent. The Dow is down about 4.7 percent for the week. Broader stock indicators were mixed.

A number of financial issues gained in global trading on news that Buffett’s Berkshire Hathaway Inc. was investing in the Goldman Sachs Group Inc., a show of confidence in the U.S. financial sector amid Wall Street’s financial turmoil.

Wednesday’s moves were limited by investor anxiety over the outcome of U.S. Congressional debate of the government’s $700 billion rescue plan for the financial sector.

“It helped investors for overall sentiment for now,” Castor Pang, an analyst at Sun Hung Kai Financial in Hong Kong, said of Buffett’s move. “But long term there are still concerns about the banking sector. Many are still cautious about the U.S. rescue plan.”

The European Central Bank offered more overnight cash to European banks in its ongoing effort to shore up shaky global markets and keep liquidity flowing between banks reluctant to lend to one another. The Frankfurt-based ECB, the central bank for the 15 countries that use the euro, offered up $40 billion on Wednesday.

Earlier in the day, the U.S. plowed $30 billion into money markets overseas, part of an ongoing effort to fight a global credit crisis.

The Fed’s action taken at 1 a.m. in the U.S. set up temporary “swap” arrangements to supply dollars to the central banks of Australia, Denmark, Norway and Sweden in exchange for their currencies.

The new swap arrangements will provide up to $10 billion each to the central banks of Australia and Sweden and US$5 billion apiece to the central banks of Denmark and Norway.

Elsewhere, Russian markets rose, buoyed by a news report that gas producer Gazprom will be able to service some of its massive debt from its own funds amid distressed market conditions. The MICEX index rose by 3.5 percent to 1,108.1 points. The benchmark RTS index gained 4.7 percent to 1,332.8 points. The recovery follows a drop Tuesday of around 3 percent for the two exchanges a response to dismal trading in the U.S.

Russian state-controlled companies led Wednesday’s rebound: OAO Sberbank, the country’s largest lender, rose by 6.1 percent on MICEX. OAO Gazprom posted a 5.1 percent rise, while OAO Rosneft gained by 4.5 percent.

Shares in banking giant VTB rose by 5 percent after it reported a 35 percent increase in first-half net profit.

In Paris, French power provider EdF’s share rose 4.41 percent after it said it had agreed to acquire British Energy Group PLC in a cash offer valued at 12.5 billion pounds ($23.18 billion). In London, British Energy Group’s shares rose 6.35 percent.

In Asia, Japanese banks were higher, with Nomura Holdings Inc., the country’s biggest brokerage, jumping 5.2 percent after announcing it would buy bankrupt firm Lehman Brothers’ operations in Europe and the Middle East.

Top Japanese bank Mitsubishi UFJ Financial Group Inc. advanced 4.2 percent. Sumitomo Mitsui Financial Group Inc., Japan’s third-largest bank, added 1.18 percent amid media reports that it is considering investing in Goldman Sachs.

Leading Australian investment bank Macquarie Group Ltd surged almost 11 percent. China Life, the country’s largest insurer, was up 3.1 percent.

China’s shares gained, led by oil giant Sinopec and phone company China Unicom following government steps to support the market.

Chinese banks, however, bucked the regional trend and declined despite buying by a state fund.

In Hong Kong, hundreds of customers descended on branches of Bank of East Asia to demand their deposits back amiod worries about its stability. The mid-sized lender insisted that “malicious” rumors spread by cell phone text messages in recent days had no basis in fact.

Deputy Chief Executive Joseph Pang told reporters that the bank “is not suffering from financial difficulties” and that it had enough cash to handle the needs of depositors.

Bank of East Asia’s stock tumbled almost 7 percent.

AP Writers Jeremiah Marquez in Hong Kong and Tomoko A. Hosaka in Tokyo contributed to this report.

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