Around the World's Markets

LONDON

SHARES posted their second successive daily advance, after a strong Wall Street bounce dragged leading UK shares up and away from earlier sharp losses. By the close the FTSE 100 had gained 56.4 points, 0.9 per cent, to 6,288.3, having been down 75 points in the morning.

The bank sector added 19 points to the index's advance, aided by higher- than-forecast half-year profits from HSBC. There were also solid six-months results from media group Pearson.

Market report, page 15

NEW YORK

WALL STREET rallied after new data eased fears that inflation was on the rise and that an interest-rate hike was certain. By midday the Dow was up 125 points, or 1.17 per cent, after the National Association of Purchasing Management reported that manufacturing sector activity grew at a slower-than-expected pace in July.

"The market has overreacted to inflation fears," said Arthur Hogan, chief market analyst at Jefferies & Co. The 30-year US Treasury bond was off 2/32, with the yield at 6.111 per cent, unchanged from Friday.

TOKYO

THE Japanese market closed slightly lower, weighed down by the stronger yen and weak New York overnight stocks. The benchmark Nikkei 225 fell 36.16 points, 0.2 per cent, to 17,825.70.

After hitting an intraday high of 114.95 yen, the dollar slid to a five- and-a-half month low of 113.95. Dollar sales on fears the US economy was overheating accelerated when Tokyo showed no sign of intervention despite repeatedly saying a strong yen was undesirable. "Share traders are very cautious about a higher yen," said one analyst.

HONG KONG

LEADING shares closed higher on last-minute buying of HSBC and Hang Seng Bank ahead of interim results. The Hang Seng closed up 248.57 points, 1.88 per cent, at 13,435.43.

HSBC Holdings closed up 3 per cent and Hang Seng Bank closed up 2 per cent. After the close HSBC and Hang Seng Bank reported rises in interim pre-tax profits far ahead of analysts' forecasts.

One analyst said there were signs of confidence the market was ready to move back up.

FRANKFURT

GERMAN shares rose 0.5 per cent, reversing an earlier fall of 2 per cent as weaker-than-expected US data calmed nerves over a rate rise. The DAX-30 ended up 27.63 points, 0.54 per cent, at 5,129.50.

Earlier in the day the DAX had slipped below 5,000 for the first time since early June on fears that interest rates in the US and Europe would soon have to rise. However, some dealers said that more clues were needed on the health of the US economy and its inflation level to be certain that rate hikes were not imminent.