US stocks soar after crisis talks
Posted by admin on 13 October, 2008 under Business news | 
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US shares have risen strongly as markets welcomed fresh government moves to end the recent financial turmoil.
The US government said it would quickly implement its financial rescue plan, and summoned bank bosses to a meeting to work out the details.
Wall Street’s main Dow Jones index soared nearly 8% in afternoon trading – after earlier gains in Europe and Asia.
The increases came after fresh moves by European governments to inject more public funds into banks.
In Washington President George W Bush said he was confident that the challenges which faced governments trying to curb the market turmoil could be overcome.
“We can work our way through these challenges and America will continue to work closely with the other nations to co-ordinate our response to this global financial crisis,” he said.
On Monday US Treasury and Federal Reserve Bank officials were due to meet with the chief executives of some of America’s biggest banks, to work out details of the US government’s $700bn (£400bn) bail-out package.
The US is also getting ready to follow in Europe’s footsteps and purchase stakes in financial institutions.
“We are designing a standardised programme to purchase equity in a broad array of financial institutions,” said Neel Kashkari, the treasury official in charge of the bail-out plan.
European governments have said they are putting up to 1.7 trillion euros ($2.3 trillion; £1.3 trillion) to protect the continent’s banks through guarantees and other emergency measures.
The sums are a maximum, and might not all be spent if the financial crisis eases.
So far Germany has approved a bank rescue plan worth up to 500bn euros, France will spend about 350bn euros, the Netherlands has pledged 200bn euros, Spain 100bn euros, and Austria 85bn euros.
Italy said it would spend as much as was needed, without giving any exact figures.
The bulk of the European money will be used to guarantee lending between banks – part of a plan agreed this weekend by the 15 nations that use the euro.
The cash will also be used to take stakes in ailing banks.
UK bank move
In other key developments on Monday:
– The UK government said it would inject up to £36bn of taxpayers cash into Royal Bank of Scotland, Lloyds TSB and HBOS
– The news lifted UK shares, with the main FTSE 100 index advancing 325 points or 8.2% to 4,256
– However, shares in the three UK banks affected end down heavily, with HBOS losing 27%, Lloyds TSB falling 14% and Royal Bank of Scotland slipping 8.3%
– Germany’s Dax index added 518 points, or 11% to 5,062, while France’s Cac 40 climbed 355 points, or 11% to 3,531
– Some central banks said they would offer financial institutions an unlimited amount of short-term dollar loans to help stem the crisis
– The Icelandic stock exchange said share trading would remain suspended until Tuesday due to continuing “unusual market conditions”
Momentous day
“Today marks another momentous day in both UK and global financial history,” said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.
“It seems Mr Brown and Co. have no choice in this matter and these takeovers are necessary, but its very wrong that it is the tax payer that should have to do this” Anthony Halpin, Aberdeen
Send us your comments”The hope in the markets is that political leaders have finally ‘grasped the nettle’, with substantial and coherent rescue plans now being formulated and rolled into place.”
The cash injection moves by Germany, France and Spain follow after talks between all 15 eurozone countries in Paris on Sunday.
The two-fold plan involves guaranteeing lending between banks and taking stakes in financial institutions – similar to the bank rescue in the UK announced last week.
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