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24 Jan, 2008 08:35

Russian markets nervous as fears of recession grow

The Russian stock market rebounded strongly in early trading on Thursday. But investors remain wary, saying the positive start doesn’t rule out further volatility on the trading floor. More than 10 per cent has been wiped off the value of shares since Mon

Wall Street made some slight gains overnight, but analysts say the recovery may only be temporary.

The same holds true for early trade in Asia, where the major indices are mostly in positive territory.

Underlying the uncertainty is a fear that the U.S. is heading for a recession, which in turn could trigger a worldwide economic slump.

In Europe on Wednesday, bourses closed deep in the red, fearing the European Central Bank would decline to follow the Fed and cut interest rates.

In Moscow, analysts are predicting more falls.  But some analysts, including the Director of the Moscow-based Institute for Economy in Transition, Egor Gaidar, say Russia’s large gold and currency reserves could help it stave off crisis.

“Russia's Stabilisation Fund is the vehicle to deal with this type of problem. If the financial policy in Russia is conservative and reasonable, then of course the Stabilisation Fund would allow us to minimise the negative impact of the global market dynamics on the Russian economy,” Gaidar said.