business headlines
Markets rally on recovery hopes
UK stocks continued their rally, with the FTSE 100 opening up nearly one per cent after markets in Asia responded to news of further stimulus in the US. The MSCI Asia Pacific Index was up 1.4 per cent at lunchtime in Tokyo, the third day of gains in a row. Japan's Nikkei 225 index gained 2.6 per cent, with Honda Motor shares adding 6.6 per cent after hopes grew that its US sales would benefit from government support measures. In Australia, Billiton, the country's biggest oil producer, rose 7.4 per cent on rising oil prices and OPEC production cut hopes.
GN, Ford, Chrysler: a nationalisation too far? 
Fed backs second stimulus package
Federal Reserve chairman Ben Bernanke backed the idea of a second financial stimulus package being passed before the end of the year, on Monday. He told the House budget committee that the economy was likely to remain weak "for several quarters" and so consideration of a new fiscal package seemed "appropriate". White House press secretary Dana Perino told reporters that President Bush was "open-minded" about the idea and markets reacted positively, with the S&P index closing up 4.8 per cent in New York.
Credit crunch bail outs are a threat to democracy
Iceland in $6bn IMF rescue
Iceland is set to announce a $6bn International Monetary Fund-sponsored rescue package, backed by a number of central banks, reported the Financial Times. The IMF is believed to be preparing to contribute just over $1bn to the package, while banks in the Nordic region and Japan will contribute the rest. The proposal is a “breakthrough” for the country as it had been struggling to find funding in its bid to re-finance, with Russia unlikely to contribute to the plan after talks over its participation stalled last week.
Japan is proof that busted economies can come back
Sweden launches bail-out
Sweden has become the latest country to launch a financial rescue package, earmarking more than 1.5tr Swedish kronor, or £117bn, to support its financial industry, said the Daily Telegraph. The government will provide guarantees on bank loans in a "financial stabilisation fund", which could be used to buy bank shares, and, following similar moves by central banks in the UK, US and Europe, the central bank will be issuing a $10bn loan to aid the credit markets. It is also to lend up to 5bn kronor to the Swedish subsidiary of Kaupthing Bank.
America enters a new Depression
Citic Pacific halves on $2bn loss
Shares in Citic Pacific fell the most in 18 years, dropping nearly 50 per cent, after the company announced $2bn losses from "unauthorised currency bets", reported Bloomberg.com. Citic, China's biggest state-owned investment company, said its parent would help to arrange a $1.5bn loan, after its bet that the Australian dollar would rise backfired. Instead it fell 30 per cent against the US dollar from its July high, causing the loss. The transactions involved were not approved by the company's chairman, and the group's Financial Director and Financial controller have left the company as a result.
Peregrine Worsthorne: financial hacks are as much to blame as bankers
France to inject 10.5bn euros into top six banks
The French government is to inject 10.5bn euros into its top six banks by the end of the year, Finance Minister Christine Lagarde said yesterday. The government will contribute the funds in the form of subordinated debt, which will not entail it taking any shares in the institutions. The Bank of France was at pains to emphasise that it was not an exercise in recapitalisation but was being done merely to smooth financing needs. However the move came as analysts said that European banks would need a further €73m to compete with UK rivals.
RBS: a failure made in Scotland
...in brief..................
Money market rates drop and Gordon Brown confirms spending
Money market rates fell again on Monday amid signs that central bank additions of liquidity are "thawing the recent freeze" in short-term lending, said the Financial Times. Traders reported "renewed lending" in both the money markets and commercial paper markets…………
Cash was king - now gold is God
"Mayhem" is expected today, as the deadline is reached for insurers of Lehman Brothers' debt to pay out on billions of dollars of policies, said the Times. Underwriters are "on the hook" for about $360bn and fears are growing that billions will go unpaid and many groups will go under as a result…………
Lehman exposes Wall Street’s moral bankruptcy
William Hill reported a nine per cent increase in gross profit in the 15 weeks to the middle of October. Shares in the betting group rose 14 per cent as its chief executive, Ralph Topping, said that earnings would remain strong even in the midst of a recession…………
Shares in Royal Bank of Scotland rose over 20 per cent yesterday after reports that private equity group CVC and reinsurer Swiss Re might take a 51 per cent stake in the group’s Direct Line and Churchill insurance businesses. The price to be paid would be £3bn…………
People: RBS's Fred gets shredded
The price of crude oil rose for a third day yesterday as OPEC prepared to cut output for the first time in nearly two years. OPEC members meet on October 24th and it is thought that they will decide to lower production by up to two million barrels a day, helping prices…………
Gordon Brown said yesterday that the government would continue spending in the downturn, in spite of borrowing £37bn in the first half of the year. The prime minister argued that the government should even increase spending to give a boost to the economy…………
The banking collapse is all your fault
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