World markets: what's happening?

Though being devoted to electronic commerce our journal constantly keeps an eye on real economy and on situation on world stock exchanges. The situation is not so critical as it was couple of months ago but still there is no reason for great joy. Though it is stock exchange and it as a volcano or earthquake cannot be predicted. Cannot be predicted but can be reviewed and exactly this thing was done by http://www.iht.com.

Global stock markets appear to be developing a case of whiplash.

In the latest of a string of sharp moves, stocks surged in Asia and Europe on Tuesday, following U.S. markets higher, after last-minute negotiations salvaged the rescue of Bear Stearns and U.S. housing sales snapped a six-month streak of declines.

But the rally extended a period of harsh volatility in the markets that underscores the lingering uncertainty about the U.S. economy and its troubled housing market - and the resulting fallout across the globe.

The violent swings indicate that traders are seizing on daily events to jump in - or out - of the market, grasping at clues about where the economy is heading. A result is a jittery, bewildered pack of investors whose mood can quickly swivel between fear and optimism.

"Opinions are really sharply divided," said Brian Gendreau, a strategist at ING investment Management.

"Is this going to be a short and shallow recession?" Gendreau said. "Or the beginning of the end of the world as we know it?"

The Nikkei 225 stock average climbed 2.1 percent in Tokyo. The S&P/ASX 200 index surged 3.7 percent in Sydney and the Hang Seng index added 6.4 percent in Hong Kong.

Two of the largest Chinese banks - Industrial & Commercial Bank of China and Bank of China - were among some of the largest gainers, rising 8.4 percent and 7.3 percent, respectively, in Hong Kong.

After the close of trade, both banks posted higher fourth-quarter profits, buoyed by the country's surging economy, but they were dragged down by holdings in U.S. subprime-related securities.

In midday trading in Europe, the FTSE 100 rose 3.1 percent in London, and the DAX 2.8 percent in Frankfurt.

On Monday, the Dow Jones industrial average closed Monday at 12,548.64, up 1.5 percent, or 187.32 points, its ninth triple-digit swing in a dozen trading sessions.

Volatility in the broad Standard & Poor's 500-stock index stood at a 70-year high, as measured by daily changes of 1 percent or more.

"It's bizarre," said Howard Silverblatt, the senior index analyst at S&P. "The volatility is enormous. The swings, one side to the other, each event moves the market in extremes."

A week ago, the Dow gained 420 points, its best daily advance in five years. It promptly plummeted 293 points, only to gain back 261 points a day later.

The moves were mirrored in stocks globally.

Few investing strategists were willing to venture a guess about what comes next.

"It's like a barbell on a fulcrum," Gendreau said. "Any little piece of information one way or the other can tip the market either way quite easily."

This week, investors have focused on the good news from real estate agents and Bear Stearns, which offered at least temporary respite for two of the U.S. economy's most beaten-up sectors.

Treasury yields eased a bit Tuesday after rising Monday as investors moved out of ultrasafe government bonds, a sign of renewed confidence. The price of crude oil briefly dipped to below $100 a barrel.

But even the positive developments are coming with a share of caveats.

The new deal by JPMorgan Chase to buy Bear Stearns was seen by some investors as a sign that the U.S. Federal Reserve Board is finally making headway in restoring confidence in the credit markets. Furthermore, Bear Stearns's value rose fivefold, to $10 a share compared with $2 in the previous offer.

The firm's stock finished on Monday at $11.25, up 89 percent.

But Bear Stearns's virtual collapse has reinforced anxieties that the current financial crisis may be one of the worst in decades.

For the most part investors are still reluctant to buy securities that may turn sour.

The housing figures also offered up a mixed picture.

Sales of previously owned homes rose unexpectedly last month to a seasonally adjusted annual rate of 5.03 million, up 2.9 percent from January, according to the National Association of Realtors.

Inventories of unsold homes, which have ballooned over the past year, fell back slightly to 4.03 million units, a 9.6-month supply at the current sales rate. The supply of single-family homes fell, but the backlog of condominiums and co-op apartments rose.

Still, home prices continued to plunge. The median price of a previously owned single-family home declined 8.7 percent in February, to $193,900, the biggest annual drop in four decades.

"Sellers are capitulating and slashing prices," said Mark Zandi, chief economist at Moody's Economy.com. "Housing looks like it's approachable now, compared to a year ago when it was just completely out of reach."

That is good news for buyers, who had vanished in recent months as they waited for prices to fall further. But sellers are seeing sharp drops in their home equity.

"It's not the all-clear sign for the housing market," Zandi said. "But it signals the beginning of the end of what will be a long bottom."

To help aid in the recovery of the U.S. housing market, the Federal Home Loan Banks received permission on Monday to buy more than $100 billion in additional mortgage-backed bonds guaranteed by Fannie Mae and Freddie Mac, a move that may make it easier for Americans to take out home loans. The decision came a week after Fannie and Freddie announced that their own regulator had freed up an additional $200 billion for the same purpose.

Few investors are certain about what to expect.

Silverblatt, of Standard & Poor's, compared the stock market to a person with a multiple-personality disorder.

"It shows the uncertainty of the market," he said. "People don't know where we are going to be tomorrow, next week, next month."