Stockholm stock market in shaky opening

As expected the Stockholm stock exchange opened sharply down on Monday although after an hour's trading had rebounded into positive territory.

• Borg drops resistance to EU fiscal stimulus (15 May 13)
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When trading opened on Monday morning the OMXS index plunged 2-4 percent as investors struggled to get a grasp on the weekend's developments in global finance.

The widely tipped crash did not materialise in reality however and Stockholm largely stayed in line with the developments on the European and Asian markets.

The major banks had a rough ride initially with SEB down 4.6 percent, Swedbank down 3.5 percent and Handelsbanken also down.

Truck maker Scania and mining firm Boliden also fell initially, while the former recovered ground fairly quickly.

On Monday morning the minister for finance, Anders Borg, told Sveriges Television (SVT) that it is difficult to predict how Sweden will be affected by the turbulent world economy.

"In many ways, Sweden has a better starting point. We have a stronger currency and our banks are less vulnerable than in many other countries. But we are a small economy and a messy market can reflect upon our situation here as well," Borg told SVT.

SEB chief economist Robert Bergqvist meanwhile expressed hope that the announcement by the European Central Bank on Sunday that they will purchase eurozone bonds and the G7 finance ministers pledge to cooperate will help to achieve stability.

"But there are still a number of underlying problems, and I think that we are going to have tough stock market conditions for the remainder of the week and the autumn," he said.

Bergqvist concluded that there is no miracle cure to prescribe to ease the crisis, and there is very little political-economic scope for politicians to act with interest rates near zero and state budgets already stretched.

"As the indications are at the moment I am concerned that we are on our way into a new global recession. And what is worrying me is that there are no tools to use in order to boost growth again," he said.

Cecilia Hermansson at SEB also questioned whether the steps taken at the weekend to encourage stability following the unprecedented lowering of the US credit rating were sufficient.

"There is a lot of insecurity and concern which is dictating the stock markets at the moment. But it was good news that decision-makers showed that they are ready to try to create stability," she said.

Asian markets fell across the board on Monday with the Tokyo Nikkei 225 index down 2.2 percent, Seoul's Kospi index down 3.8 and Hong Kong's Hang Seng down 4.0 percent.