* European terror attacks and stock markets reut.rs/2nbddaF
* Terror attacks and consumer confidence reut.rs/2mwgKTH
By Abhinav Ramnarayan and Alasdair Pal
LONDON, March 23 Financial markets have
typically reacted only briefly in the past 15 years to terror
attacks such as that on Britain's parliament on Wednesday --
mainly because these events rarely have a major impact on the
economy or economic policy settings.
Sterling fell immediately after reports of shooting outside
the parliament in London, but quickly recovered. British stocks
and bonds also drew back from initial moves.
This is because in recent history the economies of most
countries have remained resilient in the aftermath of acts of
terror, market participants said.
"It's clear that terror attacks affect people, but over the
last few years we have seen that it doesn't affect spending
habits or economic fundamentals," said Investec economist Philip
Shaw. "Markets can get nervous for a brief period of time, but
usually we see it recovering."
A European bond strategist said his initial reaction to
Wednesday's events was to consider buying "safe" German
government bonds, but the wider backdrop of tightening monetary
policy kept him from recommending such a course to his traders.
As these graphics reut.rs/2nbddaF
reut.rs/2mwgKTH show, the five most recent major terror
attacks in European countries had little impact on their stock
markets or on consumer confidence in the following months.
Regional stocks were broadly unchanged in the three months
following the Brussels, Nice and Berlin Christmas market attacks
French stock markets rallied 25 percent after the attack on
the Charlie Hebdo newspaper offices in Paris in January 2015,
largely because the ECB announced its huge asset purchase
stimulus programme in the same quarter.
French stocks also fell after the Bataclan attacks in
November 2015, although that was attributed to an impending U.S.
rate hike, the first in nearly a decade.
Consumer confidence was broadly unchanged following the
Brussels, Bataclan and 2016 Berlin Christmas market attacks,
while it was higher after the Charlie Hebdo and Nice attacks,
according to surveys.
Some analysts have suggested greater familiarity with terror
attacks has increased market resilience. But even major attacks
back in the early 2000s had limited market impact.
Spain's IBEX 35 index fell 6.7 percent in the three
days after explosions killed 192 on the Madrid Metro in March
2004. It had recovered all its losses less than a month later.
Britain's FTSE 100 fell as much as 4 percent on July
7, 2005, after a series of explosions on London's transport
system killed 56 people, but had recovered all of its losses by
the end of the next day.
(Graphics by Alasdair Pal; Editing by Catherine Evans)