FTSE Closes Higher Despite Euro Debt Fears

London's FTSE 100 clawed back earlier losses to close slightly up on the day, at the end of a turbulent week that has seen £78.2bn wiped off the share index.

It had slumped into the red, and through lunchtime remained below 5000 for the first time since August.

By the afternoon the index was gaining back ground, thanks to hints of new measures from the European Central Bank, which helped calm fears of banks' exposure to Greek debt.

G20 finance ministers meeting in Washington have set a six-week deadline for the eurozone to come to a solution over the debt crisis.

Chancellor George Osborne said the deadline coincided with their next round of talks in Cannes, France, in November.

In the US, stocks edged higher. The Dow Jones industrial average finished up 37.65 points, or 0.35%, at 10,771.48. It fell 6.4% over the week.

The FTSE 100 ended the day 0.5%, or 25.2 points, up at 5066.8. But on the week it was down 5.6%, or 301.6 points.

"It is no surprise that the trigger was headlines coming out of Europe," said Kathleen Brooks, research director at Forex.com.

"The G20 may pledge to support economic stability, but the policy makers who can provide that stability seem unwilling to give," she added.

The former chancellor Alistair Darling added to the criticism of political failings amid the financial turmoil, claiming world leaders appeared to be "standing back as we all slide towards the brink".

"That is inexcusable," he told Sky News.

However, at a media briefing in Washington, Mr Osborne said that politicians fully understood the need to act swiftly.

"The eurozone is aware of the fact that time is running out," he said.

In London, bank stocks sank on Friday morning after a warning they could take a bigger than expected hit on Greek government debt, while mining shares also fell amid global recovery concerns. But banking shares were among the main risers at the close.

The earlier losses came after hundreds of billions of pounds were lost in share prices on Thursday, as the markets continued to signal their lack of confidence in the world's ability to avoid a new recession.

David Cameron has warned failure to act swiftly over the eurozone's debt problems would "lengthen the shadows of uncertainty" looming over the global economy.

In a speech to the Canadian parliament, the Prime Minister called on European nations to show they had the "political will" to "do what is necessary".

"Endlessly putting off what has to be done doesn't help, in fact it makes the problem worse, lengthening the shadows of uncertainty that looms over the world economy," Mr Cameron said.

"We are not quite staring down the barrel, but the pattern is clear, the recovery out of the recession for the advanced economies will be difficult," he added.

Sky's Ed Conway, at the International Monetary Fund's (IMF) meeting in Washington, said: "There's no shortage of dramatic language out here.

"Every official you speak to has a different way of putting it - some talk of the "danger zone", others of the notion that we are again "on the brink of catastrophe" - but there seems to be an overt message to underline the fact that there is a serious risk of sliding back into recession.

"The problem is that so far that doesn't seem to have been matched by commensurate actions: the IMF is brilliant at diagnosis but less good at bringing together world leaders with a sense of common purpose.

"That sense of unity and action is precisely what IMF, World Bank and government officials believe is necessary if there is any hope of solving the eurozone crisis or the deeper malaise over sovereign balance sheets.

"The big question here in Washington is whether politicians will need another significant crisis - another Lehman Brothers - to push them into action this time around."

The global falls began on Wednesday night in the US when the Federal Reserve's announcement of a new stimulus plan fell flat.

The policy, named Operation Twist, will involve America's central bank selling short-term treasuries (US government bonds) and buying more longer-term debt to the tune of $400bn (£256bn).

The move is designed to get the US economy growing by pushing down interest rates on everything from mortgages to business loans - in turn giving consumers and businesses more money to spend.

But it falls short of its previous stimulus attempts, so-called quantitative easing, when the Fed pumped extra money into the economy by buying more assets.

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