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US blast rocks markets

Analysts were preparing for the possibility of a global recession on Tuesday, after a barrage of terrorist attacks in the US sent the world’ stockmarkets into freefall.
Wall Street was suspended after two passenger jets crashed into the World Trade Centre shortly before 9am East Coast time. However, European markets continued to trade, with the FTSE 100 plummeting almost 6 per cent, the French CAC falling more than 7 per cent, and the German Dax down by more than 10 per cent at 5pm UK time. The FTSE’ close of 4746 was its lowest level since 1998.
Many of the world’ financial giants were based or owned offices in the building, including Morgan Stanley, Saloman Brothers, American Express, Commerzbank, Deutsche Bank and insurance giant Aon.
One senior City broker said: ” great and the good were in that building. It’ cataclysmic. These companies may have lost all their great people. The financial loss is blasted into insignificance by the cost to human life.”
Oil prices soared on Tuesday afternoon in anticipation of an announcement that Middle Eastern terrorists were responsible for the attacks. However, a statement of culpability from a Palestinian extremist organisation was dismissed as false.
Panic in the world’ markets is now expected to continue over the coming weeks, although it is not yet certain when Wall Street will reopen. Commenting on Tuesday afternoon before markets closed, one London broker said: ” are just selling anything. People are panicking. If a war breaks out, you don’ want to be long on anything.”
Edinburgh Fund Managers deputy chief investment officer Iain Beattie says the longer term effects on markets will depend on reactions to the crisis. He says: ” depends completely on the response, and how the American people react. I don’ think they will take this sitting down. Trade will grind to a halt and the economy will slow down. This is a shocking thing to happen.”
Analysts believe that the crisis will now prompt a further 0.5 per cent cut in US interest rates on October 2, in a bid to prevent a full scale recession.

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