MercoPress. South Atlantic News Agency

Oil and Euro deny the Central bankers' revival plan a chance

Oil prices which reached 110.20 US dollars a barrel and the Euro which hit a new record high of 1.55 US dollars seem to have reduced the central banks concerted effort to a mere one day good intention.

On Wednesday shares fell as optimism about central bank measures to ease the credit crunch faded. Stock markets worldwide had earlier rallied on news of coordinated action by central banks to inject cash into nervous credit markets. The widely watched Dow Jones industrial average ended down 0.38%, a day after its biggest rally in five years. European shares had closed higher, with London's FTSE 100 up 1.5% and Germany's Dax 1.2%. France's Cac 40 gained 1.5%. Earlier on Wednesday, Japan's Nikkei rose 1.6% and Hong Kong's Hang Seng closed up 1.9%. The cash injection from central banks is designed to ease the global credit freeze, which threatens economic growth. Banks have been reluctant to lend to each other and consumers after suffering billions of dollars of losses on investments linked to the weakening US housing market. The central banks, which include the European Central Bank, Bank of England and the US Federal Reserve, will pump more than 200 billion US dollars into the banking system in an attempt to stimulate lending. But investors were hesitant to pour money back into stocks before real evidence that the banks' initiative would help the wider economy. Money kept fleeing into commodities and other currencies. Analysts questioned whether the cash injection would help solve the problems that are now gripping financial markets and threatening to slow growth in some of the world's biggest economies. The promise of extra cash on Tuesday was aimed at making it easier for businesses and consumers to borrow money by giving banks greater access to cheaper funds. Edmund Shing, a strategist at BNP Paribas said: "We have to see the real proof of the pudding in the eating". Mr Shing added that if interbank lending rates - the rate at which they lend to each other - did not fall then "the central banks will have failed" and it was unlikely that credit conditions would improve. President George W Bush said he would like to see a stronger dollar and said he was concerned that its slide was one factor behind the soaring oil price. "One reason I am for a strong dollar is because... I think it helps deal with inflation," he said. "Our dollar doesn't buy as many barrels of oil as it used to, and so therefore it's more expensive for the American people."