...the main business headlines..........
Stocks rebound on global rescue
Markets rebounded sharply on Monday, as governments in Australia and the EU agreed on bank bailout measures, said Bloomberg.com. The FTSE 100 was up nearly six per cent in early trade and in Asia markets were stronger too - the MSCI Asia Pacific excluding Japan Index was up 4.2 per cent in Hong Kong afternoon trading, with Japan closed for a holiday. Australia’s S&P/ASX 200 index rose 5.6 per cent, its biggest bank, National Australia, rising over seven per cent, and US Dow Jones index futures indicated a leap of 350 points over Friday’s close, on the weekend’s news.
Americans are piling into gold as national debt and inflation soar 
UK set for £37bn bank injection
The British government is preparing to provide its largest banks with fresh capital, which would give it controlling stakes in two major groups – Royal Bank of Scotland and HBOS. In the plan, to be announced today, RBS will gain £20bn of funding and chief executive Fred Goodwin will stand down, while HBOS and Lloyds TSB will get £17bn. Barclays is asking for more time to try to raise the necessary funds itself. With the prospect of these large government holdings the terms of the Lloyds HBOS takeover may now change.
Government pumps £37bn into three banks
EU joins financial bail-out
Countries in the Eurozone are expected to put up “hundreds of billions” in state funds to buy shares in their banks, reported the Financial Times. The “unprecedented rescue plan” was agreed at a summit in Paris where the 15 governments agreed measures modelled on the well-received UK plan to recapitalise banks and guarantee loans. Each country will make individual announcements on Monday and the rest of the EU’s 27 member states are expected to provide backing for the arrangement at a full EU meeting on Wednesday.
Newsdesk: Eurozone heads agree bank bail-out
GM and Ford consider merger
As the financial crisis begins to spill over into the real economy, the biggest companies in the US auto industry are considering “extraordinary” merger plans, said the Independent. General Motors, the country’s biggest automaker, has been in talks with both Ford and Chrysler in recent weeks as “plunging” sales force them to search desperately for cost-savings. GM is now worth less than it was in the 1929 depression and Ford’s market value was cut in half last week. Chrysler is now owned by private equity firm Cerberus Capital.
In pictures: The first Great Wall Street Crash
China rides to the rescue
The People’s Bank of China announced that it is prepared to take part in “close co-operation” with the West to maintain the stability of the financial system, reported the Daily Telegraph. The country has realised that the much-vaunted “de-coupling” of the Far East from the economies of the West is not a reality and as a result China may buy more US assets. It is thought that the Chinese central bank might buy a further $200bn of US Treasury bills, helping the bail-out effort. It already holds 70 per cent of its foreign exchange reserves in dollars.
Morgan Stanley deal renegotiated
Morgan Stanley has had to renegotiate its $9bn stake purchase by Japanese bank Mitsubishi UFJ, following sharp falls in its shareprice, said the Financial Times. The bank still plans to invest the same amount of money for a 21 per cent in the broker, but the terms of the deal will change so that the convertible preferred shares will be priced at a “significantly lower price” than previously arranged. Previously the stock would have been converted at $35.25, now the price level is likely to be between $20 and $25.
...in brief..................
Soros calls bottom and frozen Chinese billions
Hedge fund billionaire George Soros has welcomed the EU rescue package, saying that European governments have finally “got religion”, which may lead to markets turning around. After the “constructive” events of the weekend he said Friday could prove to be the turning point…………
Iceland’s prime minister attacked the UK on Sunday over “bullying” its smaller neighbour, and threatened to sue over the reaction, reported the Financial Times. Geir Haarde said that the move to put some of Kaupthing’s UK operations into administration last week led to its collapse…………
The Co-op is in negotiations to take over the Britannia building society to create a mutual organisation with more than six million customers and £70bn of assets. The Co-op plans to use the tie-up to make inroads on the high street banks. The position on windfall payments is unclear…………
Icelandic retail tycoon Jon Asgeir Johannesson has appealed to British billionaire Philip Green to come to the rescue of his indebted Baugur Group, said the Times. Green has said he is “willing and able” to help but it is unclear how much of the company’s £2bn debt he is prepared to buy…………
Spain’s Banco Santander was in “advanced talks” last night to take full control of Sovereign Bancorp in the US, Reuters reported. Santander was thought to be offering about $3.81 a share, the US bank’s closing price on the New York Exchange on Friday…………
China Investment Corp, the country’s sovereign wealth fund that owns shares in Morgan Stanley and Blackstone Group may have $5.4bn in a “frozen” money-market fund, said Bloomberg.com. It is the largest stakeholder in Reserve Primary, the US fund which went below one dollar last month…………
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