Govt package prompts market recovery
Tuesday, 14 October 2008 5:34 PM
UK-led efforts by international governments to stem the tide of financial chaos enveloping world markets appear to be having some success this morning.
Global markets rallied after government announcements across the world yesterday and new packages from Washington.
Actions to restore confidence in the banks were announced in Britain, followed by other countries in Europe and are now set to be adopted in the United States.
US president George Bush announced that $250 billion (£143 billion) would be injected into the country's banks.
Mr Bush made the announcement outside the White House before the US markets opened today.
Half of the money is expected to go to the top nine US banks to get them to start lending to each other once more, while the other half will go to thousands of other smaller banks.
In his address, Mr Bush said the measures would allow money to flow more freely between banks and thereby allow American citizens to borrow the money they need.
He said the injection would provide small business owners with "peace of mind" and bring "greater security to the banking system".
The FTSE 100 continued its rise this morning and soared 4.21 per cent after opening, following overnight gains on the Asian markets.
By 14:39 BST the index was up 190 points
The Dow Jones Industrial Average closed up 936 points, its biggest ever points gain, 11 per cent higher than the previous session.
In Japan, the Nikkei closed up a record 14 per cent, wiping out last Friday's 9.6 per cent drop.
This morning, only half a dozen stocks were in the red on the FTSE 100, in stark contrast to last week's performance.
The biggest risers were a mixture of mining, energy, utilities and banking stocks with Severn Trent up 16.38 per cent, Cairn Energy up 15.97 per cent and Scottish and Southern Energy up 14.42 per cent.
Royal Bank of Scotland rose 10.5 per cent, making up for losses yesterday, and Barclays was up 9.41 per cent.
Inflation figures hit 5.2 per cent this morning, higher than was expected.
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