Rate cuts loom as shares dip

With world financial markets almost paralysed by events in the United States, analysts see a possibility for coordinated interest rate cuts on a scale not seen since the dark days of the 1987 crash.

As equity markets slide, at least those that remain open, and investors stampede into safe assets, analysts fear the blow to confidence and an acute aversion to risk will tip the teetering world economy into recession.

In response, central banks are ready to flood markets with liquidity, and cuts in interest rates are the obvious next step.



The reaction to the terrorist attack was severe, with the London FTSE index slumping 5.7 per cent, its biggest one-day points fall since the 1987 crash.

The FTSE 100 index of leading shares plunged 287.7 points to 4746.0 at the close. Investors sold transport, banking and drug stocks and piled into oil shares as the Brent crude price spiked.

The Deutsche Boerse's Xetra DAX index of leading German shares plummeted 11.4 per cent to 4137,43, and the Paris Stock Exchange's CAC 40 index tumbled 7.4 per cent to 4059.75.

The havoc showed no sign of receding in Asia. The benchmark Nikkei 225 share index slumped 5 per cent to below the psychological 10,000 level for the first time in 17 years, while the Korean Kospi dived 12 per cent.

In the US, markets will remain closed for a second day.

- REUTERS

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Emergency telephone numbers for friends and family of victims

These numbers are valid for calls from within New Zealand, but may be overloaded at the moment.

United Airlines: 0168 1800 932 8555

American Airlines: 0168 1800 245 0999

NZ Ministry of Foreign Affairs and Trade: 0800 872 111

US Embassy in Wellington (recorded info): 04 472 2068

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