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US market joins global share fall US markets join global share fall
(about 3 hours later)
Wall Street shares fell 2.72% when trading opened in New York in the midst of the financial turmoil caused by the bankruptcy of Lehman Brothers. Leading US shares fell sharply in the midst of the financial turmoil caused by the bankruptcy of Lehman Brothers.
The benchmark Dow Jones index dropped almost 267.8 points at 11,154.2, while the broader S&P and technology-heavy Nasdaq indices sank too. The benchmark Dow Jones industrial average was 271.37 points, or 2.38% lower at 11,150.62 in late afternoon trading in New York.
At close, the UK's FTSE 100 index had lost 3.92%, France's Cac 40 index shed 3.78% and Germany's Dax lost 2.74%. The Standard & Poor's 500 Index and the Nasdaq Composite index were also lower.
Earlier in the day, the UK's FTSE 100 index had closed 3.92% down, while France's Cac 40 index shed 3.78% and Germany's Dax lost 2.74%.
Earlier, Asian markets were hit by the news with Australian shares down 1.8%.Earlier, Asian markets were hit by the news with Australian shares down 1.8%.
Several of Asia's major stock exchanges - in Tokyo, Hong Kong, Shanghai and Seoul - were closed for holidays.Several of Asia's major stock exchanges - in Tokyo, Hong Kong, Shanghai and Seoul - were closed for holidays.
But in Singapore the STI dropped 3.3% to hit a two-year low.But in Singapore the STI dropped 3.3% to hit a two-year low.
And in Taiwan, the benchmark share index closed down 4%, and in India share prices fell by more than 3.35%.And in Taiwan, the benchmark share index closed down 4%, and in India share prices fell by more than 3.35%.
In markets that were trading, banking, insurance and financial sectors suffered most after Lehman Brothers, the fourth-largest investment bank in the US, said it would file for bankruptcy protection.In markets that were trading, banking, insurance and financial sectors suffered most after Lehman Brothers, the fourth-largest investment bank in the US, said it would file for bankruptcy protection.
Financial sector nervesFinancial sector nerves
Insurance giant AIG was the biggest faller on the Dow Jones after rumours intensified that it had asked the Federal Reserve for a bridging loan of $40bn (£22bn) to help it rebuild its balance sheet. Insurance giant AIG saw shares shed 55% to $5.45, after earlier reports that it had sought emergency funding from the Federal Reserve to help it rebuild its balance sheet.
While the firm has not yet made a comment, uncertainty over its future drove investors to wipe out about 45% off its share price leaving the stock at $6.70.
Shares in Bank of America, which earlier agreed to buy Merrill Lynch in all-share deal worth $50bn, followed suit.Shares in Bank of America, which earlier agreed to buy Merrill Lynch in all-share deal worth $50bn, followed suit.
The firm dropped more than 15% as investors considered the risks of Merrill's portfolio of mortgage-backed assets and the dilutive nature of the purchase, while shares in Merrill Lynch jumped 26%. The firm dropped 19% as investors considered the risks of Merrill's portfolio of mortgage-backed assets, while in contrast Merrill Lynch added 12%.
In the UK banking group HBOS closed down 17% and traded at 232.75 pence, after being behind 33% at one stage on concerns it and rivals face more write-downs and higher funding costs. In the UK banking group HBOS closed down 17%, after being 33% lower at one stage on concerns it and rivals face more write-downs and higher funding costs.
HBOS is more reliant than other major UK bank on borrowing in the wholesale markets for funding.HBOS is more reliant than other major UK bank on borrowing in the wholesale markets for funding.
In the light of the fall in the value of its shares, HBOS issued a statement in an attempt to reassure investors.In the light of the fall in the value of its shares, HBOS issued a statement in an attempt to reassure investors.
"HBOS is a strong financial institution. The group has the strongest capital ratio of all the major UK domestic banks."HBOS is a strong financial institution. The group has the strongest capital ratio of all the major UK domestic banks.
"As we reported at the interim results, we are comfortable with our funding profile. We have access to a diverse range of funding sources and that hasn't changed," it said."As we reported at the interim results, we are comfortable with our funding profile. We have access to a diverse range of funding sources and that hasn't changed," it said.
'Dollar rally unsustainable''Dollar rally unsustainable'
On the London Bullion Market, the price of gold rose to 785.70 dollars per ounce, from 750.25 late on Friday.On the London Bullion Market, the price of gold rose to 785.70 dollars per ounce, from 750.25 late on Friday.
Gold was bought as a safe haven and initially knocked the dollar to two-month lows against the yen.Gold was bought as a safe haven and initially knocked the dollar to two-month lows against the yen.
The dollar fell against a number of currencies on concerns about the US financial system's stability, but it got some relief from lower oil prices, with US crude dropping almost $7 at one point to levels not seen since February.The dollar fell against a number of currencies on concerns about the US financial system's stability, but it got some relief from lower oil prices, with US crude dropping almost $7 at one point to levels not seen since February.
Light, sweet crude dropped $4.53 to $96.65 on the NewYork Mercantile Exchange. Light, sweet crude dropped $5.47 to $95.71 on the New York Mercantile Exchange.
Meanwhile, the Bank of England on Monday injected £5bn (6.3bn euros, $9bn) into short-term money markets, and the European Central Bank (ECB) injected 30bn euros into European money markets to keep them going.Meanwhile, the Bank of England on Monday injected £5bn (6.3bn euros, $9bn) into short-term money markets, and the European Central Bank (ECB) injected 30bn euros into European money markets to keep them going.
Anantha Nageswaran, head of investment research at Bank Julius Baer, said: "The dollar rally over the last two months was unsustainable and it was brought about by short-term liquidation pressures by many hedge funds and because of a mistaken feeling that the US economic numbers had turned the corner."Anantha Nageswaran, head of investment research at Bank Julius Baer, said: "The dollar rally over the last two months was unsustainable and it was brought about by short-term liquidation pressures by many hedge funds and because of a mistaken feeling that the US economic numbers had turned the corner."
Loan fundLoan fund
Lehman Brothers has suffered losses of billions of dollars in the sub-prime crisis, and has seen its share price plummet during recent months.Lehman Brothers has suffered losses of billions of dollars in the sub-prime crisis, and has seen its share price plummet during recent months.
A consortium of international private sector banks and securities firms announced a new $70bn loan fund, intended for use by financial companies to help ease the credit shortage.A consortium of international private sector banks and securities firms announced a new $70bn loan fund, intended for use by financial companies to help ease the credit shortage.
The US Central Bank, the Federal Reserve also made new moves to ease access to emergency credit for struggling financial companies, broadening the types of securities financial institutions can use to obtain emergency loans.The US Central Bank, the Federal Reserve also made new moves to ease access to emergency credit for struggling financial companies, broadening the types of securities financial institutions can use to obtain emergency loans.