28 Nov 2008

Indian markets shut after attacks

6:09 am on 28 November 2008

Financial markets in India are closed after the attacks in Mumbai, the country's business capital.

But India's central bank said it would continue to make cash available on the interbank lending markets.

Analysts say the attacks on Wednesday night could have a short-term effect on business and foreign investment in India in an already uncertain financial climate.

Since the start of 2008, the main stock index has fallen 50% while the rupee has fallen 20% against the dollar.

The UK India Business Council (UKIBC) said the attacks were a "wake-up call" for the Indian government on security issues, but they would not affect the multi-billion trade ties between the two countries.

Previous attacks in India were barely noticed by financial markets. But analysts said current tough market conditions will exacerbate the impact of the attack on the economy.

Foreign investors have already pulled $US13.5 billion from India since the financial crisis started.

Elsewhere in Asia, markets rose after China cut its interest rates to 5.58% from 6.66% on Wednesday. It was the country's largest rate cut in a decade.

Japan's Nikkei index rose 1.9%, Seoul's Kospi index was up 3.3% and the Hang Seng index in Hong Kong added 2.7%.