Nervous Wall Street prepares to reopen

The financial community has called for calm as jittery global markets await the re-opening of Wall Street after an unprecedented…

The financial community has called for calm as jittery global markets await the re-opening of Wall Street after an unprecedented four-day shutdown in the wake of deadly terror attacks.

The New York Stock Exchange trading floor will become the hub of the entire US equity market for the time being, housing rival exchanges including the American Stock Exchange, which have been shut down following the collapse of the World Trade towers.

But nervous markets around the world tumbled this week in response to the assault on the heart of American capitalism. London shares slid more than six per cent for the week to close at its lowest level in nearly three years and Tokyo was down 4.8 per cent.

The dollar fell against other major currencies, with the euro rising to 0.9215 dollars from 0.9120 a day earlier.

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The dollar also fell sharply against the Japanese currency to 117.18 yen from 118.78 yen on Thursday.

"What is beginning to weigh on sentiment is how US equities might open on Monday," said Mr Jeremy Batstone, head of trading at NatWest Stockbrokers in London.

"Despite the authorities endeavors to prevent shorting and volatility through market activity, prices will almost certainly have to be marked lower, initially anyway," he told AFP.

Boston-based Putnam Investments observed in an analysis that "while the direct economic damage inflicted by the attacks is relatively small in the context of the global economy, the psychological effects loom large."

In the limited US activity yesterday, the bond market moved higher as investors looked for a safe haven from expected market turmoil.

Prudential Securities chief strategist Mr Greg Smith called for calm, urging investors to avoid the temptation to sell off stock holdings.

"We believe that this is exactly the time to exercise patience and courage and stick to your long-term investment strategy," he said. "If you go back to past crises such as the Gulf War, you'll find that a 'knee-jerk' liquidation of equity holdings was a mistake, as the market snapped back within a few months."

In a statement released in Washington, the SEC said "US equities markets are the world's strongest and most vibrant, in spite of the heinous acts of last Tuesday."

It said it would also allow brokerage firms to calculate their net capital without considering the days the market was closed and relax requirements for face-to-face meetings for mutual fund boards.

AFP