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NEW YORK: Stocks rebounded on Thursday from the previous session’s massive rout, but safe assets such as gold and Treasury bills still saw heavy demand as investors braced for more instability in the financial system.
Following the bailout of insurer American International Group, the Federal Reserve and other major central banks around the world on Thursday joined forces to inject as much as $180 billion into global money markets in an attempt to keep the credit crisis from worsening. The Fed added another $55 billion in overnight loans on Thursday.
But fears have not fully receded.Troubled times
Market participants are still trying to determine how to proceed in what is looking to be the most troubling period for the world’s financial system in most investors’ memory.
The big fear on Wall Street is that there are more significant financial companies to fall. Speculation is swirling about the futures of such major players as thrift bank Washington Mutual Inc. and investment bank Morgan Stanley.
Media reports have been saying that Wells Fargo & Co. and Citigroup Inc. are interested in a possible takeover of Washington Mutual, and that Morgan Stanley and Wachovia Corp. are in talks about a possible combination.
In morning trading, the Dow Jones industrial average rose by 137.68 points, or 1.30 per cent, to 10,747.34.
Broader stock indicators also rose. The Standard & Poor’s 500 index rose 20.20, or 1.75 percent, to 1,176.59, and the Nasdaq composite index rose 33.36, or 1.59 percent, to 2,132.21.
Monday’s 504-point loss in the Dow was its biggest drop since the drop following the September 2001 terror attacks. The blue-chip index is now about 24 per cent below its October 9, 2007, record close of 14,164.53. — AP
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