...the main business headlines..........
Fed lowers borrowing costs
The Federal Reserve - the US central bank - used new powers contained in last week's financial bail-out legislation to lower interest rates below the official level yesterday, reported Bloomberg.com. The Fed is now to pay interest on bank reserves while it "floods" the market with liquidity, pushing down the overnight lending rate by 0.75 per cent to 1.25 per cent. This "stealth easing" failed to make much impact on the US stock markets however, with the Dow Jones nose-diving 800 points at one stage before recovering to close down 370.
Briefing: a crash course in banking 
Asia rallies on Australia rate cut
Markets in Asia recovered some of their losses after the Australian central bank cut interest rates by one percentage point. The Nikkei 225 index was initially 5.3 per cent weaker but recovered to trade around two per cent down. In Australia the market pulled back a 3.5 per cent drop to move up nearly two per cent, led by financial stocks. The Reserve Bank of Australia lowered the overnight rate from seven per cent to six per cent, an unexpectedly big cut. The Australian dollar fell initially before recovering on improved growth prospects.
Japan's return from financial oblivion
Bank shares dive in London
Bank shares collapsed in London yesterday, sending the FTSE 100 down nearly eight per cent and putting yet more pressure on the government, said the Independent. Royal Bank of Scotland - owner of National Westminster Bank - was the biggest faller, dropping more than 20 per cent, while HBOS, target of a takeover by rival Lloyds TSB, was down nearly the same amount. Barclays slid 15 per cent. The sell-off reflected worry over the UK system as European governments launched piecemeal rescue plans, as well as the likely dilution to shareholders from government stakes.
Non-exec directors are to blame
UK in recession BCC warns
The British Chamber of Commerce warned this morning that the UK is already in recession and the government and central bank must act "immediately" to avoid a long downturn, said the Times. The advice came as the market awaited a government plan to inject £40bn and rubber-stamping of banking reform legislation designed to maintain financial stability. In its latest quarterly survey, the BCC found that corporate confidence was at its lowest level on record in the third quarter, and as a result called for an "immediate" half-point cut in the base rate.
Financial crisis is a mess of Brown's own making
Iceland moves to rescue banks
Iceland yesterday "rushed through" emergency legislation to prevent the collapse of the country’s banking system, reported the Daily Telegraph. The government had earlier halted trading in the shares of the country's six largest banks before prime minister Geir Haarde warned the country faced "chaos" if the banking system ceased to operate properly. Other emergency measures include legislation to allow the nationalisation of banks and suspension of anti competition laws. The government is also believed to be looking at forcing pension funds to repatriate assets.
The danger of a banker with a power complex
Bank of America in surprise fund-raising bid
Bank of America, owner of Countrywide Financial and Merrill Lynch, having opened its wallet since the financial crisis began, announced that it is to raise $10bn and cut its dividend. The move surprised the market, coming alongside disappointing results, with chief executive Ken Lewis calling the current environment the most challenging time he had faced in his 38 year career. The bank also announced it had settled mis-selling claims in relation to Countrywide for $8.6bn. Shares collapsed 10 per cent in after-hours trading.
...in brief..................
Indonesia raises interest rates and eBay cuts jobs
Indonesia's central bank bucked the global trend by raising its interest rate today from 9.25 per cent to 9.5 per cent. The bank made the move to slow inflation, currently running at over 12 per cent, and boost the country’s currency, the rupiah…………
The Brics stock markets - Brazil, Russia, India and China - "crumbled" yesterday as investors exited in droves, said the Times. Exchanges in Russia and Brazil halted trading as their main indices slumped 18 per cent and 10 per cent respectively…………
Citigroup and Wells Fargo agreed to a two-day truce on Monday in their legal battle over the takeover of Wachovia, the US's sixth-biggest bank. The agreement was brokered by the Federal Reserve over concerns that a lengthy battle would harm Wachovia and the financial system…………
The Icelandic retail investor behind fashion chain Ghost has pulled the plug on finance for the company. Majority joint-owners Arev are looking for new investors for the 39-store chain. Arev also owns the stores Blooming Marvellous and Jones the Bootmaker…………
JJB Sports was struggling for its survival yesterday, after credit insurers withdrew cover to its suppliers. Shares in the sportswear chain fell to a record low as Coface, the UK's third-biggest credit insurer, said it would not protect suppliers in the event of the company collapsing…………
Online auctioneer eBay is cutting 1,000 jobs or 10 per cent of its global workforce. It aims to save $150m a year as sales slow. However it also announced that it is to spend $1.3bn on acquisitions, including online payment company Bill Me Later in the US…………
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