Russell 2000 rebounds

A rollercoaster trading day ended with the Russell 2000 (NYSE: IWM) and the Dow Jones Industrial Average (INDU) posting solid gains to snap a two-day losing streak. The small-cap index added 6.40 points, or 0.82%, to 784.23. The Dow moved up 92.84 points, or 0.70%, to 13,358.31.

Trading was choppy with little in the way in the way of economic news or corporate deal-making for either bulls or bears to sink their teeth into.

The day began on a worrying note, following news that German banking company IKB Deutsche Industriebank AG reported that it will fall short of its 2007-2008 earnings forecast, negatively affected by the U.S. subprime meltdown. The Dusseldorf-based bank’s investment fund, Rhineland Funding, had stakes in U.S. sub-prime real estate loans and other structured credit portfolios.

IKB said that last week’s sharp market declines have spread uncertainty among institutional investors, and that Rhineland Funding’s ability to access funding appears to be threatened.

Government-owned development bank KfW, IKB’s main shareholder, had to come to the rescue and implement measures to safeguard its creditworthiness.

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