Cash Infusion Helps Some Overseas Markets

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.