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Tracked by: 0 Boarder
Darling warns Europe against unilateral action
By Gavin Cordon, PA
Monday, 6 October 2008
Chancellor Alistair Darling tonight issued a sharp warning to European leaders not to risk worsening the economic crisis by taking unilateral action to protect their own banks and depositors.
As stock markets around the world continued to plummet, Mr Darling told the Commons it was essential EU governments acted in a co-ordinated fashion if they were to avoid simply passing on problems to other member states.
In London the FTSE 100 Index slumped almost 8% in its biggest one day points fall ever, while in New York the Dow Jones Industrial Average fell below the 10,000 mark for the first time in four years.
The FTSE 100 also recorded its lowest level for four years and its biggest percentage drop since Black Monday in October 1987.
Mr Darling`s intervention came after the German, Danish and Greek governments became the latest countries to guarantee all depositors that their savings would be fully protected in the event of a bank collapse.
Following a similar move last week by the Irish government, it intensified pressure on the authorities in the UK - where deposits of up to £50,000 will be guaranteed from tomorrow - to follow suit.
Mr Darling said yesterday`s surprise announcement by the German government had been a "political declaration" of intent rather than a "legally binding" guarantee for depositors.
Nevertheless, he made clear his irritation at the actions of Berlin, just the day after Chancellor Angela Merkel took part in an emergency summit in Paris intended to co-ordinate the European response.
"It does demonstrate the problems that arise when member states take unilateral action because of course it does have a knock on effect for other member states. It does emphasise the need for us all to work together," Mr Darling told MPs.
"I think that it is very important, otherwise we will end up with a situation that is confused not just to depositors, but to the institutions themselves."
With EU finance ministers due to meet tomorrow in Luxembourg, Mr Darling welcomed a joint statement by European leaders acknowledging the need for "close co-ordination and co-operation" in future interventions.
He again emphasised commitment of the UK authorities to do "whatever is necessary" to maintain stability.
The Bank of England will inject another £40 billion into the markets tomorrow, with such operations set to continue into November, while the Financial Services Authority is consulting on whether further to raise the guarantee for depositors.
With Mr Brown at his side, Mr Darling also confirmed the Government will publish the Banking Bill tomorrow giving the authorities additional powers to intervene in failing banks.
The Chancellor refused to be drawn on calls by the Tories and Liberal Democrats for the Government to take shares in the banks - effectively part-nationalising them - in order to provide them with new capital
He said that the Government would act "quickly and and decisively" when it had proposals to bring forward, warning that speculation - as happened after the initial publication of the US bail-out plan - could cause further instability.
"We have looked at what happened in the United States, nothing is worse than coming forward with a plan that isn`t sufficiently developed, where questions cannot be answered," he said.
"That ended up with 1.5 trillion dollars being lost as a result of what was going on in the market over the ten days that followed."
He ruled out, however, a call by Liberal Democrat treasury spokesman Vince Cable to re-write the Bank of England`s remit to enable it to slash interest rates in a bid to re-start the economy.
"I don`t think that if you establish an independent central bank distant from government, that you should change its terms of reference just because times are difficult."
...
In reply to:
Black Monday II: the worst for decades
Posted by :
sambala
European Banks: The Bailouts Continue
A series of government interventions are in the works as investors and politicians realize Europe is facing a banking crisis of its own
If the $700 billion mortgage bailout plan in the U.S. was supposed to calm global investors, someone forgot to tell Europe. Stock indexes from Paris to Frankfurt plunged as much as 9% on Oct. 6 over worries of a spreading crisis among European banks. A series of government interventions over the weekend and on Monday—following last week`s sudden bailouts and guarantees (BusinessWeek . com, 9/29/08)—only seemed to fan the flames of anxiety.
Investors and politicians are waking to the realization that Europe faces a banking and economic crisis of its own not linked solely to bad U.S. subprime debt. Since the credit crunch first hit 15 months ago, lending in the Old World has gotten tighter and tighter, and now the lack of capital flow is taking down globe-straddling European banks, threatening businesses with credit starvation, and roping in cash-strapped governments for multibillion-dollar, 11th-hour rescues.
"Banking is like religion: It`s all about trust and confidence," says Bob McDowall, European research director at financial-services consultancy Tower Group in London. "Governments and regulators are trying to demonstrate firm leadership and show confidence, but banks don`t trust each other."
Exposing Deep Holes
That lack of trust is a major cause of Europe`s worsening bank crisis. Aside from a few exceptions such as UBS (UBS), the Old World`s financial institutions weren`t as exposed to toxic mortgages as their American counterparts, and they`ve had a year to clean up their balance sheets. But the sudden nosedive in the U.S.—especially the collapse of Lehman Brothers—has virtually frozen European lending and exposed deep holes at institutions such as Belgium`s Fortis (FOR.BR) and Germany`s Hypo Real Estate Group (HRXG.DE).
Complicating the picture in Europe is that no central mechanisms exist to carry out a coordinated regionwide response of the sort engineered in the U.S. The European Central Bank has a more limited mandate than the Federal Reserve, and no EU equivalents exist to the U.S. Treasury Dept. or Securities & Exchange Commission.
That has left governments to tackle the crisis on a country-by-country basis, with sometimes divergent solutions that can even make matters worse for neighboring countries. A weekend meeting in Paris of top European leaders, called by Nicolas Sarkozy, the President of France and current holder of the EU`s six-month rotating presidency, made no evident progress in hammering out a framework for a regional solution.
"Europe`s piecemeal approach hasn`t helped build confidence," says Jeremy Batstone-Carr, director of private client research at stockbrokers Charles Stanley (CAY.L) in London. "Some form of coordinated response is necessary, but we haven`t seen that yet."
Rising Anxiety
The market tailspin on Oct. 6 was linked to the sense of panic engendered by the rolling country-specific reactions. Last week, for instance, the market was shocked and surprised by an €11.2 billion ($15.3 billion) part-nationalization of Fortis bank (BusinessWeek . com, 9/30/08), which signaled that bank`s balance sheet was in more trouble than previously thought. By Oct. 3, though, it became clear that more medicine was needed, and the Dutch government announced its intention to buy a 100% stake in Fortis` local operations for €16.8 billion ($22.9 billion).
More drama was to come over the weekend.
Tracked by: 0 Boarder
Darling warns Europe against unilateral action
By Gavin Cordon, PA
Monday, 6 October 2008
Chancellor Alistair Darling tonight issued a sharp warning to European leaders not to risk worsening the economic crisis by taking unilateral action to protect their own banks and depositors.
As stock markets around the world continued to plummet, Mr Darling told the Commons it was essential EU governments acted in a co-ordinated fashion if they were to avoid simply passing on problems to other member states.
In London the FTSE 100 Index slumped almost 8% in its biggest one day points fall ever, while in New York the Dow Jones Industrial Average fell below the 10,000 mark for the first time in four years.
The FTSE 100 also recorded its lowest level for four years and its biggest percentage drop since Black Monday in October 1987.
Mr Darling`s intervention came after the German, Danish and Greek governments became the latest countries to guarantee all depositors that their savings would be fully protected in the event of a bank collapse.
Following a similar move last week by the Irish government, it intensified pressure on the authorities in the UK - where deposits of up to £50,000 will be guaranteed from tomorrow - to follow suit.
Mr Darling said yesterday`s surprise announcement by the German government had been a "political declaration" of intent rather than a "legally binding" guarantee for depositors.
Nevertheless, he made clear his irritation at the actions of Berlin, just the day after Chancellor Angela Merkel took part in an emergency summit in Paris intended to co-ordinate the European response.
"It does demonstrate the problems that arise when member states take unilateral action because of course it does have a knock on effect for other member states. It does emphasise the need for us all to work together," Mr Darling told MPs.
"I think that it is very important, otherwise we will end up with a situation that is confused not just to depositors, but to the institutions themselves."
With EU finance ministers due to meet tomorrow in Luxembourg, Mr Darling welcomed a joint statement by European leaders acknowledging the need for "close co-ordination and co-operation" in future interventions.
He again emphasised commitment of the UK authorities to do "whatever is necessary" to maintain stability.
The Bank of England will inject another £40 billion into the markets tomorrow, with such operations set to continue into November, while the Financial Services Authority is consulting on whether further to raise the guarantee for depositors.
With Mr Brown at his side, Mr Darling also confirmed the Government will publish the Banking Bill tomorrow giving the authorities additional powers to intervene in failing banks.
The Chancellor refused to be drawn on calls by the Tories and Liberal Democrats for the Government to take shares in the banks - effectively part-nationalising them - in order to provide them with new capital
He said that the Government would act "quickly and and decisively" when it had proposals to bring forward, warning that speculation - as happened after the initial publication of the US bail-out plan - could cause further instability.
"We have looked at what happened in the United States, nothing is worse than coming forward with a plan that isn`t sufficiently developed, where questions cannot be answered," he said.
"That ended up with 1.5 trillion dollars being lost as a result of what was going on in the market over the ten days that followed."
He ruled out, however, a call by Liberal Democrat treasury spokesman Vince Cable to re-write the Bank of England`s remit to enable it to slash interest rates in a bid to re-start the economy.
"I don`t think that if you establish an independent central bank distant from government, that you should change its terms of reference just because times are difficult."
...
In reply to:
Black Monday II: the worst for decades
Posted by : sambala
European Banks: The Bailouts Continue
A series of government interventions are in the works as investors and politicians realize Europe is facing a banking crisis of its own
If the $700 billion mortgage bailout plan in the U.S. was supposed to calm global investors, someone forgot to tell Europe. Stock indexes from Paris to Frankfurt plunged as much as 9% on Oct. 6 over worries of a spreading crisis among European banks. A series of government interventions over the weekend and on Monday—following last week`s sudden bailouts and guarantees (BusinessWeek . com, 9/29/08)—only seemed to fan the flames of anxiety.
Investors and politicians are waking to the realization that Europe faces a banking and economic crisis of its own not linked solely to bad U.S. subprime debt. Since the credit crunch first hit 15 months ago, lending in the Old World has gotten tighter and tighter, and now the lack of capital flow is taking down globe-straddling European banks, threatening businesses with credit starvation, and roping in cash-strapped governments for multibillion-dollar, 11th-hour rescues.
"Banking is like religion: It`s all about trust and confidence," says Bob McDowall, European research director at financial-services consultancy Tower Group in London. "Governments and regulators are trying to demonstrate firm leadership and show confidence, but banks don`t trust each other."
Exposing Deep Holes
That lack of trust is a major cause of Europe`s worsening bank crisis. Aside from a few exceptions such as UBS (UBS), the Old World`s financial institutions weren`t as exposed to toxic mortgages as their American counterparts, and they`ve had a year to clean up their balance sheets. But the sudden nosedive in the U.S.—especially the collapse of Lehman Brothers—has virtually frozen European lending and exposed deep holes at institutions such as Belgium`s Fortis (FOR.BR) and Germany`s Hypo Real Estate Group (HRXG.DE).
Complicating the picture in Europe is that no central mechanisms exist to carry out a coordinated regionwide response of the sort engineered in the U.S. The European Central Bank has a more limited mandate than the Federal Reserve, and no EU equivalents exist to the U.S. Treasury Dept. or Securities & Exchange Commission.
That has left governments to tackle the crisis on a country-by-country basis, with sometimes divergent solutions that can even make matters worse for neighboring countries. A weekend meeting in Paris of top European leaders, called by Nicolas Sarkozy, the President of France and current holder of the EU`s six-month rotating presidency, made no evident progress in hammering out a framework for a regional solution.
"Europe`s piecemeal approach hasn`t helped build confidence," says Jeremy Batstone-Carr, director of private client research at stockbrokers Charles Stanley (CAY.L) in London. "Some form of coordinated response is necessary, but we haven`t seen that yet."
Rising Anxiety
The market tailspin on Oct. 6 was linked to the sense of panic engendered by the rolling country-specific reactions. Last week, for instance, the market was shocked and surprised by an €11.2 billion ($15.3 billion) part-nationalization of Fortis bank (BusinessWeek . com, 9/30/08), which signaled that bank`s balance sheet was in more trouble than previously thought. By Oct. 3, though, it became clear that more medicine was needed, and the Dutch government announced its intention to buy a 100% stake in Fortis` local operations for €16.8 billion ($22.9 billion).
More drama was to come over the weekend.
Tracked by: 0 Boarder
European Banks: The Bailouts Continue
A series of government interventions are in the works as investors and politicians realize Europe is facing a banking crisis of its own
If the $700 billion mortgage bailout plan in the U.S. was supposed to calm global investors, someone forgot to tell Europe. Stock indexes from Paris to Frankfurt plunged as much as 9% on Oct. 6 over worries of a spreading crisis among European banks. A series of government interventions over the weekend and on Monday—following last week`s sudden bailouts and guarantees (BusinessWeek . com, 9/29/08)—only seemed to fan the flames of anxiety.
Investors and politicians are waking to the realization that Europe faces a banking and economic crisis of its own not linked solely to bad U.S. subprime debt. Since the credit crunch first hit 15 months ago, lending in the Old World has gotten tighter and tighter, and now the lack of capital flow is taking down globe-straddling European banks, threatening businesses with credit starvation, and roping in cash-strapped governments for multibillion-dollar, 11th-hour rescues.
"Banking is like religion: It`s all about trust and confidence," says Bob McDowall, European research director at financial-services consultancy Tower Group in London. "Governments and regulators are trying to demonstrate firm leadership and show confidence, but banks don`t trust each other."
Exposing Deep Holes
That lack of trust is a major cause of Europe`s worsening bank crisis. Aside from a few exceptions such as UBS (UBS), the Old World`s financial institutions weren`t as exposed to toxic mortgages as their American counterparts, and they`ve had a year to clean up their balance sheets. But the sudden nosedive in the U.S.—especially the collapse of Lehman Brothers—has virtually frozen European lending and exposed deep holes at institutions such as Belgium`s Fortis (FOR.BR) and Germany`s Hypo Real Estate Group (HRXG.DE).
Complicating the picture in Europe is that no central mechanisms exist to carry out a coordinated regionwide response of the sort engineered in the U.S. The European Central Bank has a more limited mandate than the Federal Reserve, and no EU equivalents exist to the U.S. Treasury Dept. or Securities & Exchange Commission.
That has left governments to tackle the crisis on a country-by-country basis, with sometimes divergent solutions that can even make matters worse for neighboring countries. A weekend meeting in Paris of top European leaders, called by Nicolas Sarkozy, the President of France and current holder of the EU`s six-month rotating presidency, made no evident progress in hammering out a framework for a regional solution.
"Europe`s piecemeal approach hasn`t helped build confidence," says Jeremy Batstone-Carr, director of private client research at stockbrokers Charles Stanley (CAY.L) in London. "Some form of coordinated response is necessary, but we haven`t seen that yet."
Rising Anxiety
The market tailspin on Oct. 6 was linked to the sense of panic engendered by the rolling country-specific reactions. Last week, for instance, the market was shocked and surprised by an €11.2 billion ($15.3 billion) part-nationalization of Fortis bank (BusinessWeek . com, 9/30/08), which signaled that bank`s balance sheet was in more trouble than previously thought. By Oct. 3, though, it became clear that more medicine was needed, and the Dutch government announced its intention to buy a 100% stake in Fortis` local operations for €16.8 billion ($22.9 billion).
More drama was to come over the weekend.
...
In reply to:
Black Monday II: the worst for decades
Posted by : sambala
More than £93 billion was wiped from the value of the UK`s biggest companies today as London`s FTSE 100 suffered its biggest fall since Black Monday.
As fear swept through global markets and governments rushed to prop up banks across Europe the Footsie slumped 7.8 per cent - its largest one-day percentage decline since the aftermath of Black Monday in October 1987.
The index closed 391.1 points lower at 4589.2 - its lowest close total since October 2004 - as investors were rocked by the latest turmoil in the European banking sector.
But Chancellor Alistair Darling - reportedly considering moves to shore up UK banks with taxpayers` cash - did little to restore shattered confidence with firm commitments.
He said "all practical options must remain open" for dealing with the crisis, but added that it would be "irresponsible" to give a running commentary on plans.
In London, trading screens turned red after a weekend in which European governments rushed to support failing banks hit by lack of funds.
CMC Markets analyst James Hughes said: "I`ve never seen anything like this. What we are seeing over the last few weeks is a once-in-a-lifetime event."
The pressure came after German lender Hypo Real Estate became the latest to receive state aid.
Italy`s largest bank, Unicredit, also warned on profits after announcing asset sales and plans to shore up its balance sheet with a 6.6 billion euro (£5.1bn) boost.
Meanwhile, French bank BNP Paribas agreed to buy a majority stake in struggling bank Fortis - which is already part-nationalised.
Elsewhere, Iceland`s stock exchange suspended trading in shares of six major banks as its Government works on an economic rescue plan. Iceland`s Glitnir bank was nationalised last week.
The shockwaves reverberated through global stock markets. In the US, Wall Street`s Dow Jones Industrial Average traded below the 10,000 mark for the first time in more than three years.
In Asian markets, Japan`s Nikkei 225 average slid more than 4 per cent to a four-year low, while in Hong Kong the Hang Seng tumbled 5 per cent as Friday`s backing of a US financial rescue was all but forgotten.
In London, investors were unnerved by reports that the Government could take big stakes in banks - effectively part-nationalisation - to strengthen their finances. Halifax Bank of Scotland and Royal Bank of Scotland both slumped 20 per cent, while Barclays lost 15 per cent .
Just a week ago the UK`s benchmark index also fell more than 5 per cent as markets were stunned by Bradford & Bingley`s nationalisation.
Manoj Ladwa, senior trader at ETX Capital, said: "Black Mondays used to be a once-a-decade event - now they`re coming along more regularly than a London bus."
Analysts warned that public stakes in banks - while offering some security - could result in existing shareholders being diluted.
The London market was also hit hard by hefty falls from heavily-weighted mining stocks after experts warned that the sector`s earnings could almost halve this year.
Oil prices plunged to an eight-month low below 90 US dollars a barrel at one point amid fears over the impact of a deep recession on demand.
Hargreaves Lansdown`s head of equity analysis Richard Hunter also warned of the wider effects of the money-market freeze paralysing the banking system.
"The very fact that banks are unwilling to lend to each other - on the basis that the other counterparty may not even be in existence at the end of the loan - necessarily means that they will be equally unwilling to lend to companies, or indeed individuals.
"Stability must return to the system first of all, before markets return to anything like their previous levels of activity."
Tracked by: 0 Boarder
European Banks: The Bailouts Continue
A series of government interventions are in the works as investors and politicians realize Europe is facing a banking crisis of its own
If the $700 billion mortgage bailout plan in the U.S. was supposed to calm global investors, someone forgot to tell Europe. Stock indexes from Paris to Frankfurt plunged as much as 9% on Oct. 6 over worries of a spreading crisis among European banks. A series of government interventions over the weekend and on Monday—following last week`s sudden bailouts and guarantees (BusinessWeek . com, 9/29/08)—only seemed to fan the flames of anxiety.
Investors and politicians are waking to the realization that Europe faces a banking and economic crisis of its own not linked solely to bad U.S. subprime debt. Since the credit crunch first hit 15 months ago, lending in the Old World has gotten tighter and tighter, and now the lack of capital flow is taking down globe-straddling European banks, threatening businesses with credit starvation, and roping in cash-strapped governments for multibillion-dollar, 11th-hour rescues.
"Banking is like religion: It`s all about trust and confidence," says Bob McDowall, European research director at financial-services consultancy Tower Group in London. "Governments and regulators are trying to demonstrate firm leadership and show confidence, but banks don`t trust each other."
Exposing Deep Holes
That lack of trust is a major cause of Europe`s worsening bank crisis. Aside from a few exceptions such as UBS (UBS), the Old World`s financial institutions weren`t as exposed to toxic mortgages as their American counterparts, and they`ve had a year to clean up their balance sheets. But the sudden nosedive in the U.S.—especially the collapse of Lehman Brothers—has virtually frozen European lending and exposed deep holes at institutions such as Belgium`s Fortis (FOR.BR) and Germany`s Hypo Real Estate Group (HRXG.DE).
Complicating the picture in Europe is that no central mechanisms exist to carry out a coordinated regionwide response of the sort engineered in the U.S. The European Central Bank has a more limited mandate than the Federal Reserve, and no EU equivalents exist to the U.S. Treasury Dept. or Securities & Exchange Commission.
That has left governments to tackle the crisis on a country-by-country basis, with sometimes divergent solutions that can even make matters worse for neighboring countries. A weekend meeting in Paris of top European leaders, called by Nicolas Sarkozy, the President of France and current holder of the EU`s six-month rotating presidency, made no evident progress in hammering out a framework for a regional solution.
"Europe`s piecemeal approach hasn`t helped build confidence," says Jeremy Batstone-Carr, director of private client research at stockbrokers Charles Stanley (CAY.L) in London. "Some form of coordinated response is necessary, but we haven`t seen that yet."
Rising Anxiety
The market tailspin on Oct. 6 was linked to the sense of panic engendered by the rolling country-specific reactions. Last week, for instance, the market was shocked and surprised by an €11.2 billion ($15.3 billion) part-nationalization of Fortis bank (BusinessWeek . com, 9/30/08), which signaled that bank`s balance sheet was in more trouble than previously thought. By Oct. 3, though, it became clear that more medicine was needed, and the Dutch government announced its intention to buy a 100% stake in Fortis` local operations for €16.8 billion ($22.9 billion).
More drama was to come over the weekend.
...
In reply to:
Black Monday II: the worst for decades
Posted by : sambala
More than £93 billion was wiped from the value of the UK`s biggest companies today as London`s FTSE 100 suffered its biggest fall since Black Monday.
As fear swept through global markets and governments rushed to prop up banks across Europe the Footsie slumped 7.8 per cent - its largest one-day percentage decline since the aftermath of Black Monday in October 1987.
The index closed 391.1 points lower at 4589.2 - its lowest close total since October 2004 - as investors were rocked by the latest turmoil in the European banking sector.
But Chancellor Alistair Darling - reportedly considering moves to shore up UK banks with taxpayers` cash - did little to restore shattered confidence with firm commitments.
He said "all practical options must remain open" for dealing with the crisis, but added that it would be "irresponsible" to give a running commentary on plans.
In London, trading screens turned red after a weekend in which European governments rushed to support failing banks hit by lack of funds.
CMC Markets analyst James Hughes said: "I`ve never seen anything like this. What we are seeing over the last few weeks is a once-in-a-lifetime event."
The pressure came after German lender Hypo Real Estate became the latest to receive state aid.
Italy`s largest bank, Unicredit, also warned on profits after announcing asset sales and plans to shore up its balance sheet with a 6.6 billion euro (£5.1bn) boost.
Meanwhile, French bank BNP Paribas agreed to buy a majority stake in struggling bank Fortis - which is already part-nationalised.
Elsewhere, Iceland`s stock exchange suspended trading in shares of six major banks as its Government works on an economic rescue plan. Iceland`s Glitnir bank was nationalised last week.
The shockwaves reverberated through global stock markets. In the US, Wall Street`s Dow Jones Industrial Average traded below the 10,000 mark for the first time in more than three years.
In Asian markets, Japan`s Nikkei 225 average slid more than 4 per cent to a four-year low, while in Hong Kong the Hang Seng tumbled 5 per cent as Friday`s backing of a US financial rescue was all but forgotten.
In London, investors were unnerved by reports that the Government could take big stakes in banks - effectively part-nationalisation - to strengthen their finances. Halifax Bank of Scotland and Royal Bank of Scotland both slumped 20 per cent, while Barclays lost 15 per cent .
Just a week ago the UK`s benchmark index also fell more than 5 per cent as markets were stunned by Bradford & Bingley`s nationalisation.
Manoj Ladwa, senior trader at ETX Capital, said: "Black Mondays used to be a once-a-decade event - now they`re coming along more regularly than a London bus."
Analysts warned that public stakes in banks - while offering some security - could result in existing shareholders being diluted.
The London market was also hit hard by hefty falls from heavily-weighted mining stocks after experts warned that the sector`s earnings could almost halve this year.
Oil prices plunged to an eight-month low below 90 US dollars a barrel at one point amid fears over the impact of a deep recession on demand.
Hargreaves Lansdown`s head of equity analysis Richard Hunter also warned of the wider effects of the money-market freeze paralysing the banking system.
"The very fact that banks are unwilling to lend to each other - on the basis that the other counterparty may not even be in existence at the end of the loan - necessarily means that they will be equally unwilling to lend to companies, or indeed individuals.
"Stability must return to the system first of all, before markets return to anything like their previous levels of activity."
Tracked by: 0 Boarder
More than £93 billion was wiped from the value of the UK`s biggest companies today as London`s FTSE 100 suffered its biggest fall since Black Monday.
As fear swept through global markets and governments rushed to prop up banks across Europe the Footsie slumped 7.8 per cent - its largest one-day percentage decline since the aftermath of Black Monday in October 1987.
The index closed 391.1 points lower at 4589.2 - its lowest close total since October 2004 - as investors were rocked by the latest turmoil in the European banking sector.
But Chancellor Alistair Darling - reportedly considering moves to shore up UK banks with taxpayers` cash - did little to restore shattered confidence with firm commitments.
He said "all practical options must remain open" for dealing with the crisis, but added that it would be "irresponsible" to give a running commentary on plans.
In London, trading screens turned red after a weekend in which European governments rushed to support failing banks hit by lack of funds.
CMC Markets analyst James Hughes said: "I`ve never seen anything like this. What we are seeing over the last few weeks is a once-in-a-lifetime event."
The pressure came after German lender Hypo Real Estate became the latest to receive state aid.
Italy`s largest bank, Unicredit, also warned on profits after announcing asset sales and plans to shore up its balance sheet with a 6.6 billion euro (£5.1bn) boost.
Meanwhile, French bank BNP Paribas agreed to buy a majority stake in struggling bank Fortis - which is already part-nationalised.
Elsewhere, Iceland`s stock exchange suspended trading in shares of six major banks as its Government works on an economic rescue plan. Iceland`s Glitnir bank was nationalised last week.
The shockwaves reverberated through global stock markets. In the US, Wall Street`s Dow Jones Industrial Average traded below the 10,000 mark for the first time in more than three years.
In Asian markets, Japan`s Nikkei 225 average slid more than 4 per cent to a four-year low, while in Hong Kong the Hang Seng tumbled 5 per cent as Friday`s backing of a US financial rescue was all but forgotten.
In London, investors were unnerved by reports that the Government could take big stakes in banks - effectively part-nationalisation - to strengthen their finances. Halifax Bank of Scotland and Royal Bank of Scotland both slumped 20 per cent, while Barclays lost 15 per cent .
Just a week ago the UK`s benchmark index also fell more than 5 per cent as markets were stunned by Bradford & Bingley`s nationalisation.
Manoj Ladwa, senior trader at ETX Capital, said: "Black Mondays used to be a once-a-decade event - now they`re coming along more regularly than a London bus."
Analysts warned that public stakes in banks - while offering some security - could result in existing shareholders being diluted.
The London market was also hit hard by hefty falls from heavily-weighted mining stocks after experts warned that the sector`s earnings could almost halve this year.
Oil prices plunged to an eight-month low below 90 US dollars a barrel at one point amid fears over the impact of a deep recession on demand.
Hargreaves Lansdown`s head of equity analysis Richard Hunter also warned of the wider effects of the money-market freeze paralysing the banking system.
"The very fact that banks are unwilling to lend to each other - on the basis that the other counterparty may not even be in existence at the end of the loan - necessarily means that they will be equally unwilling to lend to companies, or indeed individuals.
"Stability must return to the system first of all, before markets return to anything like their previous levels of activity."
...
Tracked by: 0 Boarder
More than £93 billion was wiped from the value of the UK`s biggest companies today as London`s FTSE 100 suffered its biggest fall since Black Monday.
As fear swept through global markets and governments rushed to prop up banks across Europe the Footsie slumped 7.8 per cent - its largest one-day percentage decline since the aftermath of Black Monday in October 1987.
The index closed 391.1 points lower at 4589.2 - its lowest close total since October 2004 - as investors were rocked by the latest turmoil in the European banking sector.
But Chancellor Alistair Darling - reportedly considering moves to shore up UK banks with taxpayers` cash - did little to restore shattered confidence with firm commitments.
He said "all practical options must remain open" for dealing with the crisis, but added that it would be "irresponsible" to give a running commentary on plans.
In London, trading screens turned red after a weekend in which European governments rushed to support failing banks hit by lack of funds.
CMC Markets analyst James Hughes said: "I`ve never seen anything like this. What we are seeing over the last few weeks is a once-in-a-lifetime event."
The pressure came after German lender Hypo Real Estate became the latest to receive state aid.
Italy`s largest bank, Unicredit, also warned on profits after announcing asset sales and plans to shore up its balance sheet with a 6.6 billion euro (£5.1bn) boost.
Meanwhile, French bank BNP Paribas agreed to buy a majority stake in struggling bank Fortis - which is already part-nationalised.
Elsewhere, Iceland`s stock exchange suspended trading in shares of six major banks as its Government works on an economic rescue plan. Iceland`s Glitnir bank was nationalised last week.
The shockwaves reverberated through global stock markets. In the US, Wall Street`s Dow Jones Industrial Average traded below the 10,000 mark for the first time in more than three years.
In Asian markets, Japan`s Nikkei 225 average slid more than 4 per cent to a four-year low, while in Hong Kong the Hang Seng tumbled 5 per cent as Friday`s backing of a US financial rescue was all but forgotten.
In London, investors were unnerved by reports that the Government could take big stakes in banks - effectively part-nationalisation - to strengthen their finances. Halifax Bank of Scotland and Royal Bank of Scotland both slumped 20 per cent, while Barclays lost 15 per cent .
Just a week ago the UK`s benchmark index also fell more than 5 per cent as markets were stunned by Bradford & Bingley`s nationalisation.
Manoj Ladwa, senior trader at ETX Capital, said: "Black Mondays used to be a once-a-decade event - now they`re coming along more regularly than a London bus."
Analysts warned that public stakes in banks - while offering some security - could result in existing shareholders being diluted.
The London market was also hit hard by hefty falls from heavily-weighted mining stocks after experts warned that the sector`s earnings could almost halve this year.
Oil prices plunged to an eight-month low below 90 US dollars a barrel at one point amid fears over the impact of a deep recession on demand.
Hargreaves Lansdown`s head of equity analysis Richard Hunter also warned of the wider effects of the money-market freeze paralysing the banking system.
"The very fact that banks are unwilling to lend to each other - on the basis that the other counterparty may not even be in existence at the end of the loan - necessarily means that they will be equally unwilling to lend to companies, or indeed individuals.
"Stability must return to the system first of all, before markets return to anything like their previous levels of activity."
...
Tracked by: 0 Boarder
Wait ! Stay in Cash!
cheers
ramji...
Tracked by: 108 Boarders
Is it because of ethanol...or... is just that this commodity is just sweet deal now.... ...
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by : lovemeall26
Hi pradesh,
Arre buy anything, its like buy one, get two free. I have entered sugar - like renuka and triveni apart from other sectors.
lovemeall26
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When the very existance of oneself is in the bargain, i dont see sense prevailing ..only animal instincts prevail.. my words are for sure....
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by : BullSheetRules
Dear vam_aru,
Technically, there is Limited downside.
If FIIs continue with their MAD SELLing even after this 53% correction, then expect GAME to TURN dirty going forward in Indian markets!
This is what I mentioned before! low volume GAME can become dangerous if PLAYed on continuous basis!
Let us hope better SENSE prevails among those BIG PLAYers!
I hope this clarifies!
Gud luk & happy investing! :)
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Paulson taps bailout chief
Treasury reveals interim guidelines for hiring private-sector firms to help run financial rescue program and for preventing conflicts
NEW YORK -- The Treasury Department on Monday sought to answer the first of many questions surrounding how it will implement the $700 billion financial rescue plan.
The department announced that Treasury Secretary Henry Paulson had appointed Neel Kashkari to oversee the Troubled Assets Relief Program and the newly created Office of Financial Stability.
Kashkari, a former executive at Goldman Sachs, is the assistant Treasury secretary for International Economics and Development. He joined Treasury in July 2006 and worked on several of Treasury`s initiatives in response to the housing crisis - including the formation of the mortgage industry alliance Hope Now.
Kashkari will manage the centerpiece of one of the country`s most far-reaching government interventions in the economy - purchasing and managing up to $700 billion in troubled assets to unclog the credit market.
The Treasury on Monday also released its guidelines for how it would hire firms to manage asset purchases.
It cited the need to begin the program urgently. Asset managers and other private-sector agents involved in running it may be hired "through other than full and open competition," the Treasury said in a statement.
The department will post help wanted notices on its Web site and applicants will be reviewed in a two-stage process after they`ve expressed interest.
"Given the urgent need to implement the Troubled Assets Relief Program quickly, the selection process for asset managers may involve extremely short deadlines for submitting information" and attending interviews, Treasury noted.
Asset managers hired to conduct transactions on behalf of the Treasury will be considered financial agents of the United States. That means they will have a fiduciary duty and "responsibility for protecting the interests of the United States."
Information on the contracts awarded to private-sector firms will be posted online at the Federal Business Opportunities Web site or at the Federal Procurement Data System site.
Still unclear from the guidelines, however, is how - and how much - the asset managers will be paid.
The interim guidelines also address conflicts of interests for contractors who are hired for the program.
Before lawmakers approved the rescue plan, they included in the bill a requirement that there be two oversight committees keeping an eye on the new TARP programs Treasury puts in place.
The first, a Financial Stability Board, is made up of the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director, the Housing and Urban Development secretary and the Treasury secretary.
The second, a congressional oversight panel, to which the Financial Stability Board will report, will have five members appointed by House and Senate leadership from both parties.
...
In reply to:
Paulson`s Poison & Antidote
Posted by : sambala
Credit still choked, Treasurys rally
European bank problems add to investor worries, leading to tighter borrowing and a flight from stocks.
NEW YORK -- Credit markets were still choked Monday, as the financial crisis spread throughout Europe, and investors reacted to the 0 billion bailout plan signed by President Bush .
Treasury prices ticked higher as investors waited to see signs of relief and stock markets around the world tumbled.
The European economy has been tripped by the same credit crunch that forced the bailout plan signed into law by President Bush last week. Over the weekend, Germany implemented its own bailout package.
The private financial sector of Germany has pledged €50 billion to juice the Hypo Real Estate bank, the nation`s Finance Ministry said Sunday. Hypo is one of Germany`s largest housing lenders.
The German government also stepped in to shore up consumer confidence by guaranteeing all private checking and savings accounts.
Treasurys: Government debt prices rose Monday as investors waited to see when the bailout package would start to have an effect on the crippled economy. Treasurys are a perceived safe-haven for investors in times of uncertainty.
The benchmark 10-year note rose 26/32 to 104-2/32 and its yield fell to 3.51% from 3.63% late Friday. Bond prices and yields move in opposite directions.
The 30-year bond rose 1-15/32 to 108-17/32 and its yield dipped to 4.01% from 4.12% late Friday.
The 2-year note rose 7/32 to 101-1/32 and its yield fell to 1.49% from 1.66%.
The yield on the 3-month note fell to 0.41% from 0.49%. The 3-month note is a popular asset for money markets looking for stability because it offers a safe place to park cash on a short-term basis.
The gains in Treasurys reflected a flight to safety from stocks. Asian markets ended down 4% to 5%, Europe`s major indexes were 5% lower at midday, and U.S. futures pointed to a sharply lower open.
Bailout aftermath: The goal of the U.S. bailout plan was to loosen the clogged pipes of credit. Banks have been sitting on their cash, unwilling to lend, and if they are lending, it comes at a premium. When banks don`t lend, economic growth stalls and consumers have a hard time getting a loan for a house, car or tuition.
But the bailout plan was not expected to be a quick fix. The plan will take some time to offer relief for the economy and even longer for that relief to trickle down to consumers.
After weeks of belabored negotiating, and an initial failed vote in the House, the bill became law Friday.
President Bush, whose administration proposed the measure last month, has urged patience.
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Oil settles down $6.07 at $87.81 a barrel, as markets reel from global credit crisis....
In reply to:
The End of Wall Street
Posted by : sambala
DOW INDUSTRIALS DOWN 800 POINTS; CRUDE CLOSES BELOW $90 FOR FIRST TIME SINCE FEBRUARY
Tracked by: 108 Boarders
Dear vam_aru,
Technically, there is Limited downside.
If FIIs continue with their MAD SELLing even after this 53% correction, then expect GAME to TURN dirty going forward in Indian markets!
This is what I mentioned before! low volume GAME can become dangerous if PLAYed on continuous basis!
Let us hope better SENSE prevails among those BIG PLAYers!
I hope this clarifies!
Gud luk & happy investing! :)
...
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by : vam_aru
Dear BSR,
Quote:
Latest BS views say Limited Downside and Sharp Upside Movements! :)
Let us hope better sense prevails among those Big Players!
Unquote:
If the BS views are saying limited downside and sharp movements means That markets will bedoing the opposite ... is that correct..?
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Robin Griffiths, Technical Strategist, Cazenove Capital Management, said we are now in the capitulation phase of the bear market for this year. Technical Analyst Ashwani Gujral said 3,800 will get retested maybe in the next couple of days....
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DOW INDUSTRIALS DOWN 800 POINTS; CRUDE CLOSES BELOW $90 FOR FIRST TIME SINCE FEBRUARY...
In reply to:
The End of Wall Street
Posted by : sambala
Worldwide wreckage
U.S. indexes keep falling as European shares end with worst one-day drop ever; Dow sinks below 10,000 level; S&P, Nasdaq slide 7%-8%
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Dear d_k,
I hope you had a look on those msgs!:) I have outlined different perspective taking TataSteel as an example.
You can think on similar lines.
Be careful and cautious in such times!
RULES for Genuine LT Investors are DIFFERENT!
Gud luk & happy investing! :)...
In reply to:
WILL NIFTY HIT 3600 & SENSEX TOUCH 12000
Posted by :
d_k
Dear BSR,
Thanks for your prompt reply. Will appreciate if you could elaborate a little more on tata steel. I planned to buy but stopped seeing your message.
regards
deepak
