Reply #9: GLOBAL MARKETS-Fed in focus as credit fears spread [View All]

[Ghost Dog]

http://www.reuters.com/article/marketsNews/idINL2069817220071120?rpc=44

LONDON, Nov 20 (Reuters) - World stocks put in modest gains on Tuesday and the dollar fell sharply, hitting new record lows against the euro and Swiss franc, as speculation swirled that the U.S. Federal Reserve would meet to cut interest rates.

But fears of further fallout from the credit crisis rocked European shares when trading in investment bank UBS (UBSN.VX: Quote, Profile, Research) was briefly suspended as the stock fell on concerns over its exposure to subpime loans.

Trading in Insurer Swiss Re (RUKNVX: Quote, Profile, Research) was also suspended. It announced a $1.07 billion write down on Monday.

Credit fears have come back with a vengeance this week, dragging stocks sharply lower on Monday after Goldman Sachs told clients to expect $15 billion or more in write-offs from Citigroup (C.N: Quote, Profile, Research) as a result of mortgage losses.

This led to speculation on Tuesday that the Fed would hold an emergency meeting to cut rates. Although unsubstantiated, it gained momentum in markets and was cited in broker reports.

One result was to lift global stocks. MSCI's main world index (.MIWD00000PUS: Quote, Profile, Research) was up 0.3 percent after losing around 1.7 percent a day earlier. Emerging market stocks (.MSCIEF: Quote, Profile, Research), however, fell.

European shares opened higher, fell sharply after the UBS news, then recovered slightly despite general anxiety about banks.

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