Rumors of French credit downgrade rocks global markets

The Korean stock market managed to bounce back on Thursday as most Asian financial markets rose or slightly fell including China’s 1-percent rise, apparently getting out of panic.

By contrast, rumors of a possible downgrade of France`s credit rating significantly pushed down shares in Europe and the U.S. on Wednesday (local time), but European markets started upbeat Thursday.

Affected by the plunge in the European and the U.S. stock markets Wednesday, Korea’s benchmark KOSPI started with a 72-point plunge Thursday. After stock prices sharply swung up and down repeatedly, the KOSPI rebounded to close at 1,817.44, up by 11.2 points or 0.62 percent from Wednesday.

China’s Shanghai Composite Index rose 1.27 percent while Japan’s Nikkei dipped 0.63 percent and Taiwan’s Stock Exchange Weighted Index fell 0.22 percent.

The fluctuations in global markets were due to the rumor that France could suffer a credit downgrade after the U.S. With fears growing among investors, the three major credit rating agencies –- Moody’s, Standard and Poor’s and Fitch –- ruled out a downgrade but this failed to calm down markets.

yunjung@donga.com witness@donga.com