Gulf markets bounce back

GCC markets rise after the news that AIG was to receive US$85 billion from the US government.

Gulf markets recovered at the close of trading today, buoyed by the rescue of insurance giant AIG by the US government. The Dubai Financial Market closed up 2.29 per cent, reclaiming the losses it made yesterday, while the Abu Dhabi Securities Exchange posted a 1.62 per cent gain. Other GCC markets posted as good as, if not bigger gains ? Saudi was up 3.3 per cent, Doha gained a huge 8.61 per cent after seeing some significant losses earlier this week, while Muscat was boosted by a 4.16 per cent rise. Smaller, but equally important gains given the free fall of recent days and weeks, were seen in Kuwait and Bahrain.

Tokyo's Nikkei market closed up 1.2 per cent, while Hong Kong was down 3.63 per cent. In a hectic day on the London Stock Exchange (LSE), shares rose despite the plummeting value of banking group HBOS, and were given a fillip when it emerged that rival Lloyds TSB was close to acquiring the beleaguered bank. The LSE is currently up 0.86 per cent. European exchanges were not surging ahead as much as their GCC counterparts, with Frankfurt up a mere 0.18 per cent, and Paris gaining 0.3 per cent.

Early this morning the US government announced it would provide an $85bn loan to AIG, and take ownership of 80 per cent of the company's shares. The government feared AIG's collapse would continue the global financial chaos because the giant underwriter is so closely entwined with financial institutions. [e-mail]