|
New York: Bank rescues spread in Europe on Tuesday and US President George W. Bush gave assurances that a $700 billion bailout plan for the financial sector was not dead.
Wall Street stocks opened higher, a day after the US House of Representatives rejected the rescue plan and sent markets into a spin.
"There's an overarching belief that at some point this week, whether it's Wednesday or Thursday, we'll get something passed by the House," said Arthur Hogan, chief market analyst at Jefferies & Co.
Earlier, the European Commission said the US must live up to its responsibility for starting the crisis, and Bush pledged to keep pushing Congress to pass the bailout plan.
"I assure our citizens and citizens around the world that this is not the end of the legislative process," Bush said before the stock market opened.
In Europe, Ireland unveiled a blanket guarantee for savings held by its banks, covering up to 400 billion euros ($575 billion) in liabilities, sending Irish bank stocks roaring up against a weaker sector trend.
Russia for the second time in a month briefly clamped its stock markets shut after just seconds of trading.
Shares of British bank HBOS fell on fears that Lloyds TSB Group could renegotiate a deal to buy the lender.
France joined Belgium and Luxembourg in a 6.4 billion euro lifeline for bank Dexia and said it would come to the aid of savers with new bank measures by the end of the week.
French President Nicolas Sarkozy began talks on the crisis with finance executives yesterday.
He has said he will meet this week with officials from Europe's G8 member states.
Leaders are trying to reassure global markets as fin-ancial shares reel, threatening the existence of major banks, which have stopped lending to one another despite enormous injections of funds by central banks.
Facing the worst financial crisis since the Great Depression, global central banks scrambled again to try to relieve a severe squeeze in money markets by more than doubling the amount of dollar funding to $620 billion.
Bans on short-selling stocks spread to Russia, South Korea and Taiwan. Nervous investors piled into gold and US Treasuries. Oil fell on fears of further economic slowdown, and the Japanese yen hit a four-month high.
Christian Noyer, a European Central Bank governing council member, sought to reassure investors.
"There is no reason to be frightened and to give in to panic," he said on France's RTL radio. "I don't say there won't be things that will appear in the accounts that are published in the next weeks or months, but there is no drama in front of us."
A week that started badly with the rescue of three banks in Europe and the distressed sale of big US lender Wachovia to Citigroup grew worse after the US Congress was unable to agree on a rescue package.
Bloodshed
The Dow posted its largest point decline ever on Monday, while the S&P 500 had its worst day since the 1987 crisis with an 8.8 per cent drop.
US Treasury Secretary Henry Paulson said he would continue to work with Congress to formulate a bill that could pass.
The bill rejected on Monday was crafted by Paulson and Federal Reserve Chairman Ben Bernanke in negotiations with congressional leaders.
The Senate returns today and the House tomorrow after a break for the Jewish New Year.
US presidential candidates Barack Obama and John McCain both said Congress must pass the bailout plan, which now dominates the run-up to the November 4 election.
See also Pages 36, 38, 41 & 42
ireland
deposits guarantee
Ireland guaranteed all bank deposits yesterday in a bid to improve the industry's access to international funds frozen by the global credit crunch.
The pledge, which covers up to 400 billion euros ($575 billion) of liabilities - more than twice the country's annual GDP - and includes retail, commercial and interbank deposits, takes effect immediately and expires in September 2010.
The scheme, which also covers certain bonds and other debt instruments, will be provided at a charge to the banks, whose level is still to be determined.
Ireland last week became the first euro zone economy to slide into recession this year, ending more than a decade of growth.
- Reuters
|
