Video: Europe's markets rebound

updated 7/8/2005 3:06:38 PM ET 2005-07-08T19:06:38

European stock markets rebounded Friday, one day after a series of terrorist blasts in London’s transportation system rattled the region’s markets. Insurance and travel-related stocks regained some of the ground they lost one day earlier.

The British pound, pushed to a 19-month low Thursday, was still near that level . The FTSE 100 rose 1.4 percent, while Germany’s DAX was up 1.5 percent and the CAC 40 benchmark index in Paris rose 1.9 percent.

Shares of British Airways rose after falling more than 4 percent a day earlier. Hotels group Hilton also rose after a drop of 3.3 percent, and insurer Allianz was higher in Frankfurt after its loss of 2.7 percent. Shares of Munich Re, the world’s biggest reinsurer, also gained after a loss of 2.4 percent.

The British pound was at $1.7407, down from $1.7425 in late New York trading Thursday. Earlier Thursday, the pound dropped to $1.7403, its lowest point since December 2003.

On Thursday, morning rush-hour explosions shook the city’s subway and ripped apart a double-decker bus in the deadliest terror attacks on London since World War II. Police have said scores of people were killed and about 700 injured.

But analysts said market recoveries later in the day Thursday suggested the economic effects would be brief.

RBS Financial Markets economist Ross Walker said the reaction was “mature and quite rational” and noted that markets recovered much of their losses as police and emergency services gained control of the situation late Thursday.

The Bank of England went ahead with its monthly interest rate-setting meeting as planned, keeping the cost of borrowing at 4.75 percent.

European Central Bank President Jean-Claude Trichet, speaking after the bank announced it would hold its main interest rate at 2 percent, said he did not believe the attacks “will have any serious impact” on markets in the long term.

Trichet said he had spoken with U.S. Federal Reserve Chairman Alan Greenspan and Bank of England head Mervyn King and concluded that financial systems were working normally. The Bank of England also kept its key rate steady Thursday at 4.75 percent.

“We are alert, we are vigilant, we are monitoring all developments,” he said. But he added he saw “no particular information” calling for action.

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