Global Markets Urged To Stay Calm After London Attacks

World financial leaders appealed for calm Thursday after markets were left badly shaken by a series of deadly bomb blasts that ripped through London, Europe's foremost trading center. European Central Bank president Jean-Claude Trichet said there was no need for special action by the ECB or the Bank of England, which both left interest rates steady Thursday, but that they stood ready to intervene if necessary.

"We mustn't allow the situation to get out of hand by acting wrongly or panicking," German Finance Minister Hans Eichel said. "The global economy is not going to be knocked out of kilter," he insisted, adding that finance ministers were in contact with their respective central banks after Thursday's rush-hour bombings that killed at least 37 people.

European stock markets plunged, sterling slid against major currencies and oil prices plummeted from record peaks reached on July 7 owing to concerns that the attacks would dent global growth and discourage airline travel. But by the end of trade in New York, the contract for light sweet crude for delivery in August had risen 55 cents to $60.73 a barrel as traders refocused attention on tropical storms bearing down on the Gulf of Mexico.

U.S. Treasury Secretary John Snow said his department was monitoring global markets in the wake of the "horrific" bomb attacks on London underground trains and a double-decker bus." Speaking at the Group of Eight summit in Scotland, Snow said "these horrific acts stand in stark contrast to the compassionate work" at the G8 in trying to alleviate global poverty.

European Central Bank held its ground on July 8 keeping its key rate steady at 2.0% for the 25th month running despite fierce political pressure for a cut to bolster the faltering eurozone economy.

Trichet said he had contacted both Bank of England chief Mervyn King and U.S. Federal Reserve chairman Alan Greenspan following the attacks. "At this stage, we have no information that would be calling for action," he said. "If it were the case, you can be sure that we would do that in real time."

In the wake of the September 11, 2001 attacks in the U.S., the Fed and ECB led major central banks in pumping extra liquidity into the markets and a week later, cut interest rates in a coordinated move to boost confidence.

Copyright Agence France-Presse, 2005

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