Wall Street makes cautious start

US stocks have made a mixed start to trade on Wednesday, with the main indexes broadly flat.After rising in the first few minutes of trade, the Dow Jones index fell back to stand up 17.7 points at 13,254 while the Nasdaq was down 7.74 at 2,545.The flat start in the US trimmed gains that had been seen on European markets.In early afternoon trade in Europe, Germany's Dax index was up 0.5%, France's Cac 40 was 0.3% higher while London's FTSE 100 was barely changed.Earlier, Japan's benchmark Nikkei index had closed up 2.6%, while China's main stock index hit another record high.After several days of gains, analysts have begun to hope that the worst of the recent market turmoil may be over.Yet Tony Russell, senior equities adviser at ABN AMRO Morgans, cautioned that volatility is likely to continue for some time."The market is getting more comfortable...but confidence can certainly be shattered by any more revelations," he said.The recent market turmoil was triggered by problems in the US mortgage market, and especially in the so-called sub-prime sector that makes loans to people with poor credit history.
Sub-prime default levels rose following higher interest rates in the US, raising fears that this could hamper credit availability in the broader market, beyond the home loan sector.However, news on Wednesday that Bank of America plans to invest $2bn in one of the sub-prime market leaders, struggling US mortgage firm Countrywide Financial, was hailed as a promising sign.
"The fact that M&A [mergers and acquisitions] activity resurfaced in the US market means liquidity may have started to come back," said Masayoshi Yano, senior manager of investment information at Tokai Tokyo Securities.

http://news.bbc.co.uk/2/hi/business/6959784.stm

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