European stocks rallied, sending the Dow Jones STOXX 600 Index to its biggest weekly gain since 2001, as money markets began to unfreeze and central banks from the US to Japan cut interest rates to revive economic growth.
Standard Chartered PLC, UBS AG and Lloyds TSB Group PLC climbed at least 19 percent as short-term borrowing costs between banks declined in Europe, the US and Asia. Xstrata PLC surged 36 percent and Total SA climbed 19 percent after rate reductions from the Federal Reserve, Bank of Japan and the People? Bank of China boosted commodities and eased concern the global economy is headed for a prolonged recession.
?hat governments did diminished the systemic risk,?said Lionel Heurtin, a Paris-based money manager at Ofi Asset Management, which oversees about US$22 billion. ?aluations are low. Stocks are interesting if you buy for the long term.?br />
PHOTO: EPA
Europe? STOXX 600 advanced 12 percent to 222.07 this week, the biggest gain since September 2001. The rally pared the measure? decline last month to 13 percent, still the steepest monthly drop since September 2002.
The STOXX 600 was on Monday valued at 7.9 times its companies?reported earnings, the cheapest level since at least January 2002, Bloomberg data show.
The European equity benchmark has tumbled 39 percent this year, poised for a record annual drop, as a jump in US mortgage defaults saddled global banks with more than US$684 billion of losses and caused credit markets to lock up.
National benchmark indexes climbed this week in all 18 western European markets except Iceland. Germany? DAX rallied 16 percent, led by a 137 percent surge in Volkswagen AG. France? CAC 40 advanced 9.2 percent, while the UK? FTSE 100 increased 13 percent.
Standard Chartered, the UK? third-largest bank, climbed 34 計ercent and UBS, the biggest bank in Switzerland, added 24 percent. Lloyds TSB, the UK lender that agreed to buy HBOS PLC, rose 19 percent.
The cost of borrowing dollars for three months in London fell 49 basis points this week to 3.03 percent, capping the first monthly decline since May, according to the British Bankers?Association. Rates on comparable euro loans dropped 16 basis points to 4.76 percent, while the three-month rate for US dollar loans in Singapore slid 43 basis points to 3.09 percent.
The decline in rates signals as much as US$3 trillion of emergency funds provided by governments to alleviate the credit crisis may be working.
The Bank of Japan cut its benchmark overnight interest rate this week by 20 basis points to 0.3 percent, while the Fed lowered its target rate 50 basis points to 1 percent.
The Fed also began buying commercial paper from companies and agreed to pump US$120 billion into Brazil, Mexico, South Korea and Singapore to help alleviate demand for dollar-based funding.
European Central Bank policy makers meet on Thursday, when they will probably reduce the region? main refinancing rate a half point to 3.25 percent, a Bloomberg survey of economists showed.
Interest-rate cuts this week helped fuel a rebound in commodities, sending the Reuters/Jefferies CRB Index of 19 raw materials to a 2.8 percent gain, the first advance in five weeks.
Xstrata, the world? fourth-biggest nickel producer, advanced 36 percent. Total, Europe? third-largest oil company, climbed 19 percent.
Volkswagen AG surged 137 percent after Porsche SE said it may increase its stake in Europe? biggest carmaker to 75 percent, prompting traders who had wagered on declines in Volkswagen stock to buy back shares to close out their bets. Porsche added 51 percent on speculation the sports-car maker will profit from Volkswagen? surge.
BACK IN THE NEIGHBORHOOD: The planned transit by the ‘Baden-Wuerttemberg’ and the ‘Frankfurt am Main’ would be the German Navy’s first passage since 2002 Two German warships are set to pass through the Taiwan Strait in the middle of this month, becoming the first German naval vessels to do so in 22 years, Der Spiegel reported on Saturday. Reuters last month reported that the warships, the frigate Baden-Wuerttemberg and the replenishment ship Frankfurt am Main, were awaiting orders from Berlin to sail the Strait, prompting a rebuke to Germany from Beijing. Der Spiegel cited unspecified sources as saying Beijing would not be formally notified of the German ships’ passage to emphasize that Berlin views the trip as normal. The German Federal Ministry of Defense declined to comment. While
‘REGRETTABLE’: TPP lawmaker Vivian Huang said that ‘we will continue to support Chairman Ko and defend his innocence’ as he was transferred to a detention facility The Taipei District Court yesterday ruled that Taiwan People’s Party (TPP) Chairman Ko Wen-je (柯文哲) be detained and held incommunicado over alleged corruption dating to his time as mayor of Taipei. The ruling reversed a decision by the court on Monday morning that Ko be released without bail. After prosecutors on Wednesday appealed the Monday decision, the High Court said that Ko had potentially been “actively involved” in the alleged corruption and ordered the district court to hold a second detention hearing. Ko did not speak to reporters upon his arrival at the district court at about 9:10am yesterday to attend a procedural
Thirty Taiwanese firms, led by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and ASE Technology Holding Co (日月光投控), yesterday launched a silicon photonics industry alliance, aiming to accelerate the medium’s development and address the energy efficiency of artificial intelligence (AI) devices like data centers. As the world is ushering in a new AI era with tremendous demand for computing power and algorithms, energy consumption is emerging as a critical issue, TSMC vice president of integrated interconnect and packaging business C.K. Hsu (徐國晉) told a media briefing in Taipei. To solve this issue, it is essential to introduce silicon photonics and copackaged optics (CPO)
The High Court yesterday overturned a Taipei District Court decision to release Taiwan People’s Party Chairman Ko Wen-je (柯文哲) and sent the case back to the lower court. The Taipei District Prosecutors’ Office on Saturday questioned Ko amid a probe into alleged corruption involving the Core Pacific City development project during his time as Taipei mayor. Core Pacific City, also known as Living Mall (京華城購物中心), was a shopping mall in Taipei’s Songshan District (松山) that has since been demolished. On Monday, the Taipei District Court granted a second motion by Ko’s attorney to release him without bail, a decision the prosecutors’ office appealed
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