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Major World Markets Struggle to Rebound after Last Week's Sharp Declines


U.S. stock indexes ended nearly flat on Monday as worries about losses tied to subprime mortgages continued to drive shares lower. Major central banks in Europe, Japan and the U.S. tried to soothe rattled markets last week by injecting more than $300 billion into the credit markets to "normalize" market conditions. But some analysts say the cash injection is just a short term fix for a longer term problem. VOA's Mil Arcega reports.

U.S. stock markets struggled to rebound Monday following a volatile trading week, which saw the Dow plunge 387 points in one day. Analysts blamed the volatility on losses in the U.S. subprime markets, which could make credit harder to come by and further reduce consumer spending.

Central banks around the world responded by increasing the amount of money available to lenders. Despite the continuing concerns, Alec Young, an equity strategist at Standard & Poor's, believes the economy is strong enough to weather the storm. "Our economists are forecasting two percent GDP [gross demostic product] growth this year. That's a slowdown from the 3.3 percent we saw last year. But it's a far cry from a recession. In addition, globally we're seeing very good growth."

But some investors believe the worries behind last week's losses are likely to stick around for a while. Wall Street trader Steven Tamberino says, "Actually I do think there's going to be a recession. The market has done a lot of correcting lately, but I think overall it's on a downward trend and with housing the way it's been, and housing really driving the market. That's the main reason."

The U.S. federal reserve says it will provide funds "as necessary" to help ease market concerns. But Barclay's financial analyst Henk Potts expects the downward trend to continue. "The nervousness that we are seeing at the moment revolves around the fact that we don't know how deep these problems are, who has these problems, the extent of their liability. Who has got the exposure. There's all these great unknown questions out there, and that is where the nervousness comes through."

Despite making gains early in the day, the Dow index closed more than three points lower Monday.

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