Cash Infusion Helps Some Overseas Markets

European Exchanges Make Gains, Asian Markets Fall As Central Banks Aid U.S. Money Markets

(CBS/AP)  European stocks halted three days of losses in early afternoon trading Thursday, rising slightly after a concerted effort by central banks to pump billions more U.S. dollars into troubled money markets and limit the global financial crisis. Asian markets fell.

Britain's FTSE-100 was up more than half a percent after Lloyds TSB PLC's 12.2 billion-pound (US$21.8 billion) deal to acquire struggling HBOS PLC, Britain's biggest mortgage lender, eased some concern among traders there.

"The acquisition will strengthen the presence of Lloyds on the UK market," said Ivanka Stefanova, a credit analyst with UniCredit in Munich.

In Frankfurt, the German DAX was up 0.86 percent, lifted in part by shares of automaker Volkswagen AG, whom investors believe will likely be completely taken over by Porsche SE in the coming weeks. That pushed shares of Europe's biggest automaker up more than 17 percent in trading to euro281.67 (US$408.48).

Deutsche Bank AG, Germany's biggest bank by assets, saw its shares rise more than 7.5 percent to euro52.44 (US$76.05).

Analysts said the gains in European markets were largely the result of the announcement by the European Central Bank, Federal Reserve and central banks in Switzerland, Japan, Britain and Canada, to provide as much as US$180 billion in extra dollars to cash-starved banks.

In a statement, the Fed said it had authorized the expansion of swap lines, or reciprocal currency arrangements, with the other central banks, including amounts up to US$110 billion by the ECB and up to US$27 million by the Swiss National Bank.

The Fed also said new swap facilities had been authorized with the Bank of Japan for as much as US$60 billion; US$40 billion for the Bank of England and US$10 billion for the Bank of Canada.

CBS News correspondent Jeff Glor reported there are concerns in the U.S. that any further bank failures could put severe strain on the government's FDIC insurance fund - which is already at its lowest level since 2003.

Glor added that more government bailouts from Uncle Sam would almost surely swell the national debt, presently weighing in around $9 trillion and costing taxpayers $230 billion a year in interest alone.

Some analysts said the worst was yet to come.

Andre Chassagnol, head of research at Paris-based brokerage HPC, said Thursday's share price gains were just a knee-jerk reaction to this week's steep drop and said he was advising clients to get out now.

"I would get out and wait for the real crash," Chassagnol said.

In Paris, the CAC 40 was up 1.1 percent, led in part by bank Dexia, shares of which were up almost 7 percent, as well as strong gains by luxury goods maker PPR, which rose 5.6 percent and EDF, which was up nearly 4.7 percent.

Gains were also seen on exchanges in Madrid, where the SMSI was up 0.72 percent and in Stockholm, where stocks also rose 0.72 percent.

Elsewhere, Russia's main stock exchanges remained mostly closed Thursday, a day after regulators suspended trading amid a dizzying plummet in share prices. The MICEX resumed limited trading; the RTS was set to reopen Friday.

ITAR-Tass and Interfax quoted Russian Finance Minister Alexei Kudrin also as saying that Russia's three largest banks will be getting an extra 60 billion rubles (US$2.36 billion) to help bolster the financial markets.

In New York, stocks opened sharply higher after the previous session's massive rout, but then faltered in midday trading.

Across Asia, stocks fell but managed to erase most of the sharp losses that arose after Lehman Brothers Holdings Inc. filed for bankruptcy protection and insurer American International Group Inc. was bailed out by the U.S. government.

Hong Kong's Hang Seng Index, which sank more than 7 percent at one point, closed virtually flat at 17,632 points. Tokyo's Nikkei 225 index, also paring early losses, ended down 2.2 percent to 11,489.30, a three-year low.

In other markets, Australia's S&P/ASX200 index fell 2.4 percent, South Korea's Kospi lost 2.3 percent, and China's Shanghai benchmark dropped 1.7 percent after earlier falling 7 percent.

Investors were shaken by the Federal Reserve's US$85 billion emergency loan to AIG, the huge U.S. insurer that lost billions in the risky business of insuring against bond defaults and became the latest victim of the historic financial turmoil that's engulfed Wall Street over the last year.

The crisis, a result of problems with souring mortgage debt and restricted credit, has already brought down Wall Street giants Lehman Brothers, Merrill Lynch and Bear Stearns. The two independent investment banks left standing - Morgan Stanley and Goldman Sachs Group - remained under scrutiny.

"It's a complete collapse of confidence," said Francis Lun, general manager of Fulbright Securities Ltd in Hong Kong. "The financial crisis in the U.S. is hitting everyone, everyone is running for cover. If the largest insurance company can fail, then no one is safe."

Oil prices spiked above US$100 again as benchmark crude for October delivery shot up by more than US$4 to trade at US$102.24 in European electronic trading Thursday on the New York Mercantile Exchange.

It had opened lower after jumping overnight as investors fled equities to crude as short-term safe haven amid global market unrest.

The euro rose to US$1.4409 in European trading from the US$1.4376 it bought in New York late Wednesday.

The British pound drifted lower to US$1.8199 from US$1.8245, while the dollar bought 105 Japanese yen compared with 105.24 yen.

[avigil2]

YOU PEOPLE MUST BE CRAZY!!! George W. Bush is the best president this country has ever seen! Our economy is strong, the American people are happy!!! - posted by twalk1122

What sort of crack have you been smokin'' for the last 8 years? Either you''re completely delusional or the joke is on us.

[redbds]

What a mess we are in. It all started when the liberals took over congress two years ago. Just goes to show you what putting the do nothing liberals in charge of anything will get you. We are all screwed. Let it go and start over. As long as we still have a strong military we will be fine.

[tazntpa]

OMG, that''s how to fix the problem - keep pumping money into these failures? It''s the same as lending to those who never should have gotten the loan in the first place. So, I guess the answer is to just print more money - great solution! The US Government has no business saving AIG or Lehman or any others - the Market will correct its self, but not while the expectation is the US is there to bail them out and print some more money. The US has now set the expectation and will have to bail the next failures; otherwise it will destroy the Global Economy!

[shimano35]

Could somebody please bail me out???? Just so I can pay my bills.

[lovegetpeace]

Folks,
With Bailouts, one postpone the 4th Great Depression for around the year 2018.

Advice to read "The Great Depression of 1990" by Ravi Batra.

[dinkydog1]

That debt was $5 billion at the start of the Bush-Cheney regime.
Posted by jmurrieta11 at 08:36 AM : Sep 18, 2008

Why don''''''''t you do some research before making stupid post. The national debt in September of 2000 was 5.7 TRILLION dollars. As far as the surplus Fritz Hollings(D) of SC said that there was no surplus that it was all smoke and mirrors. If there was one it was because we had a Republican House and Senate not Clinton. Clinton had said there were deficits as far as could be seen into the future.

No President can institute monetary bills only the House can. We didn''''''''t have a war to fight when Clinton was in office. You can argue all you want about how the war was handled, but the fact remains we have not been attacked again



Posted by dmw1167 at 11:28 AM : Sep 18, 2008

The national debt was reduced 2.4 trillion during Clinton''s watch. It has almost doubled under the Bush years to 9.7 trillion. Bush grew domestic spending faster than almost any president in history.

[boatdocster]

No Pelosi and crew went blindly about doing absolutely nothing while posturing for anyone with a mic. And yes, it''''''''s under their watch this is occurring.

Posted by Edward1975 at 12:12 PM : Sep 18, 2008

Let''s see, the housing market started to go sour 1.5 years ago, while the GOP was still in charge of both sides of Congress, and had been for the last 5-6 years.

Tell me again how that is Pelosi''s fault, when 96% of the bad loans, bad borrowing and bad debt and bad war spending under George Bush happened before she had the majority.

Tell me again how the GW Bush Administration has supported the GOP principle of being a "fiscal conservative". And for all those GOP losers in the press today asking how we got here - those are the same people that gave GWB a blank check and EVERYTHING he asked for for the last 7 years.

[pirmin3]

Tax payers propping up the rich. I''m lovin'' it.

[missingamerica]

No Pelosi and crew went blindly about doing absolutely nothing while posturing for anyone with a mic. They have accomplished not a thing since their taking Congress, other than funding a war, they said they were against, that they swore we would be taken out of, if they took Congress. And yes, it''''s under their watch this is occurring.

Posted by Edward1975 at 12:12 PM : Sep 18, 2008

It is tiresome, watching Republicans say stuff like what you just said, while ignoring the fact that the Republicans in Congress block absolutely everything and anything that might help the people of our nation.

[missingamerica]

It worked! The DOW is red again!

Posted by gop_will_win at 12:11 PM : Sep 18, 2008

What worked? What made the DOW go red?

What did you do, go down to the pit on the Street and indulge yourself in a little ghastly flatulence?

[edward1975-2009]

No Pelosi and crew went blindly about doing absolutely nothing while posturing for anyone with a mic. They have accomplished not a thing since their taking Congress, other than funding a war, they said they were against, that they swore we would be taken out of, if they took Congress. And yes, it''s under their watch this is occurring.

[gop_will_win]

My company provides a 401k match. I have my money in the most conservative fund I can pick and I am STILL losing money daily !!!!

REPUBLICANS S U C K !!!!!!!!!!!!!!!!!!!!


--------------------------------------------------------------------------------

Posted by tejasdemo
============================
The most conservative fund is a money market and you dont lose money on those.

[gop_will_win]

It worked! The DOW is red again!

[missingamerica]

Kinda funny that all fell apart after Pelosi and crew took over. But of they couldn''''t have been part of the problem, as up front and honest as they have been. Could they?

Posted by Edward1975 at 11:53 AM : Sep 18, 2008

Uh huh. Sure, Pelosi and her people are absolutely FAMOUS for fostering a "regulation is bad" atmosphere, and passing bankruptcy laws to bias the risks of lending towards the financial industry - with the result that the financial industry in their greed jumped right over the cliff.

Sure, this is all Pelosi''s fault...just like Iraq is Pelosi''s fault, right?

I mean, she probably gave birth to both D. Cheney and Saddam Hussein, right?

[edward1975-2009]

Kinda funny that all fell apart after Pelosi and crew took over. But of they couldn''t have been part of the problem, as up front and honest as they have been. Could they?

[elemmire]

Hmmm, let''s see if this can get me kicked off. You, and you know who you are, shout insults and "report as abuse" other comments because you don''t like the statistics they use to back up your arguments.

How low can you go.

[elemmire]

This is pathetic. So many of you criticize the Bush administration, and yet you would vote for a candidate who is on the payroll of Fannie Mae and Freddie Mac and who doesn''t even know what AIG stands for. Shame on you democrats. You say you want to make things all better for people who screwed themselves over, and this present-voting pompous windbag who knows even less about domestic issues than he does about foreign policy (or is that the other way around)is the best you could come up with. Shameful. And don''t even bring up Sarah Palin''s "inexperience". She is not on the top of the Republican ticket.

[mypatch]

The poor are safe here. They don''t have any money to lose. The middle class are not too far behind the poor. Most people don''t have any money saved. ONLY the RICH are crying. The greedy ones are losing big time right now. But we tax payers are going to end up bailing out these business''s. So who really has control? Time to stop big bucks from milking us dry.

[loncheneyjr]

THIS IS UNBELIEVABLE!!! THEY ARE NOW INSINUATING THAT PEOPLE WHO SAVED THEIR MONEY ALL THEIR LIVES WHO WORKED AND SAVED AND DID THE RIGHT THING ALL OF THEIR LIVES ARE NOW IN DANGER OF LOSING THEIR FUNDS!!!!!! THIS IS NOT POSSIBLE AND IT IS NOT ACCEPTABLE. THEY MUST ALL MOVE TO ONCE AGAIN TAKE ANY DOUBT OUT OF THE FDIC OR BANKS ARE GOING TO START DROPPING LIKE FLIES!!!!

[Gary Kempf]

It seems Bush didn''t bother informing Congress, especially Republican congressional folks before the last two bail outs. They are calling this a outrage, (CNN). They are demanding the W/H and treasury dept report to them..