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ATTACK ON THE U.S.

Saturday, Feb. 4, 2006

Markets are paralyzed, banks try to ease jitters

By JACQUIE McNISH, The Globe and Mail
Wednesday, September 12, 2001

The precision strike on the United States' financial nerve centre has paralyzed markets around the world and raised the spectre of a crisis that could plague businesses for months to come.

For the first time since the Depression-era panic in 1933, the New York Stock Exchange will shut its doors for the second consecutive day as Wall Street sifts through the rubble of the destroyed World Trade Center. Also closed today are the American Stock Exchange, the Nasdaq Stock Market and numerous international exchanges, including possibly the Toronto Stock Exchange.

In an effort to calm jittery investors, central bankers, bank executives and and government officials around the globe promised last night to pump cash into shell-shocked financial markets.

But the tragedy could not have come at a worse time for world economies. Investors in Europe and North America have been jittery for months because of the crash in technology stocks and mounting statistical evidence of a sharp economic slowdown. In such anxious times, business players pay close attention to stock, bond and currency trades as leading indicators of the economic future. With trading in everything from pork bellies to U.S. Treasury bills suspended, investors will be enormously confused about market direction.

"It will be awful" today, said Stanley Nabi, managing director of Credit Suisse First Boston in New York.

The first evidence of panic appeared with the opening of markets in Japan this morning. The benchmark Nikkei average plummeted 6 per cent at one point to below 9,700 - its lowest level since 1984.

Financial rescue workers will have their work cut out for them because many of Wall Street's key players have been devastated.

This wasn't supposed to happen.

Ever since the 1993 bomb attack on the World Trade Center sent chills through the financial system, Wall Street firms have been ordered by regulators to have contingency plans in place to relocate their operations in the event of a possible terrorist attack. With so many thousands of workers and hundreds of businesses affected by yesterday's disaster, securities executives are estimating it could take days, possibly weeks, to restore trading to normal levels.

"Nobody can cover . . . all the contingencies," said Sadakichi Robbins, a New York-based fixed-income strategist with Bank Julius Baer.

Like many Wall Street firms, Julius Baer will move its operations to a backup site in New Jersey this morning. What few of the brokerage firms will know until today, however, is how many of their employees have survived or will be able and willing to work after yesterday's carnage.

To avert a possible market panic, Wall Street officials said yesterday that brokerages are urging the New York Stock Exchange to open as soon as possible. These sources said although the NYSE building was relatively unscathed by yesterday's disaster, the exchange is reluctant to resume trading until there's certainty that it is safe for traders to return to the floor.

"We have to show the world that it is business as usual on Wall Street," said a New York brokerage official who did not want to be identified. "If we don't, there will be a panic."

The Toronto Stock Exchange said it won't decide until this morning whether to resume trading.

Late last night, it remained unclear whether other major corporations would be open for business. Many major companies in North America were moved away from office towers yesterday. Ford Motor Co. of Canada Ltd. cancelled shifts at several of its plants because of snarled border traffic, while DaimlerChrysler Corp. halted production at its U.S. plants.

In a sign that captured the sentiments of most businesses, Fidelity Investments, the largest U.S. mutual fund, taped a message to the door of a Boston office stating it would reopen today, "conditions permitting." Until North American markets reopen, the financial spotlight will move to Europe and Asia, where most exchanges are continuing to operate. In Europe last night, traders reported that investors were flooding to such safe havens as gold and oil and gas investments. "There is panic buying of metals, gold and oil - it is complete pandemonium," said Robin Bhar, metals analyst at Standard Bank London.




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