Global shares rally but analysts warn of possible turmoil ahead

LONDON, March 6, 2007 (AFP) – European and Asian share prices rebounded on Tuesday following recent heavy falls as US Treasury Secretary Henry Paulson reassured that Asia’s two biggest economies, Japan and China, remained sound.

On Wall Street, shares closed lower Monday following declines across Europe and Asia, with the Dow Jones index shedding 0.53 percent after an early rally fizzled out. Economists, however, said the rally could be short lived and forecast further drops for blue-chip equities worldwide.

“There may be more selling — one seldom calls the bottom on these things — but we suspect the downside would be limited to a 10-percent correction from top to bottom,” said Mike Lenhoff, chief strategist at Brewin Dolphin Securities in London.

European markets benefited Tuesday from strong gains to energy and mining shares, which themselves profited from rebounding commodity prices.

In late morning trade, London’s FTSE 100 index of leading shares rose 0.88 percent to 6,111.80 points.

In early afternoon deals, Frankfurt’s DAX 30 climbed 0.72 percent to 6,581.66 points and in Paris the CAC 40 advanced 0.97 percent to 5,437.43.

Asia’s battered stock markets meanwhile rallied Tuesday as bargai