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US, China kick off global round of rate cuts
(Agencies)
Updated: 2008-10-30 06:55

WORLD STOCKS RISE, DOLLAR DOWN

The interest rate cuts, and expectations of action in the United States, lifted world stock markets and sent the US dollar plunging, sparking a 7 percent surge in oil.

Japan's Nikkei index ended up 7.7 percent and European shares climbed 7.5 percent.

Wall Street followed Tuesday's 10 percent rally, its second-biggest rise ever, with a volatile day. The Dow ended down 0.82 percent and the S&P 500 fell 1.11 percent, reversing a rally after the Fed cut.

The former head of the US National Bureau of Economic Research, Martin Feldstein, was quoted as saying the United States has entered a recession that will last longer and do more damage than any other since World War Two.

Economists expect US GDP figures on Thursday to show a 0.5 percent decline in July-September, according to the median of forecasts in a Reuters poll, and many see that as the start of a contraction lasting at least nine months.

Two of the largest US auto parts makers, BorgWarner Inc and Tenneco Inc, said the crisis would mean more job cuts and plant closings.

As the US presidential campaign hit the final stretch before the November 4 vote, Republican John McCain questioned Democratic rival Barack Obama's readiness for the White House, saying he would be bad news for small business.

Obama, who polls show is trusted more on the economy by voters, said McCain's policies would hurt the middle class.

British finance minister Alistair Darling said Britain is moving into recession and the government will need to spend more and forget about its self-imposed limits on borrowing for the time being.