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US shares fall mirroring EU slide Global shares sink on bank fears
(29 minutes later)
US shares have fallen sharply amidst trouble on European financial markets and news that Citigroup has taken US bank Wachovia. Shares in the US and across Europe have tumbled amid a string of bad news from the troubled banking sector.
The Dow Jones fell 316.44 points, or 2.8%, to 10.826.69, while the Nasdaq dropped 3.8% to 2,100.71 points. The S&P 500 shed 3.5% to 1,170.55 points. Confidence was hit by news of the rescue of Wachovia in the US, of Fortis in Europe and the nationalisation of UK bank Bradford & Bingley.
In London the FTSE 100 index was down 3.7% after after UK bank Bradford & Bingley was partly nationalised. In the US, the Dow Jones was down 2.8% in early trade. In Europe, the UK's FTSE 100 was down 3.7% and Germany's Dax index was 3.4% lower.
This was despite news of a $700bn (£380bn) US finance sector bailout. Central banks have put in extra funds to try to ease the credit squeeze.
The main European share markets all fell sharply, with the UK FTSE 100 down 3.3% and Germany's Dax 2.8% lower.
In Japan, the benchmark Nikkei 225 index closed down 1.3%.
However, news that a US rescue deal was set to be approved boosted the dollar, which climbed strongly against the pound and the euro.
There's a sense that there's a lot more bad news to come Peter Dixon, Commerzbank B&B nationalisedUS rescue deal publishedFortis deal agreedThere's a sense that there's a lot more bad news to come Peter Dixon, Commerzbank B&B nationalisedUS rescue deal publishedFortis deal agreed
In early trade in Europe, the euro was down 2% against the dollar at $1.4301, while the pound fell 2.5% to $1.7962, before recovering slightly. On the currency markets the dollar had risen strongly against both the pound and the euro on news that the $700bn US financial bail-out deal was set to be approved, but it then fell back.
In early New York trade, the euro was trading at $1.4426, off day-lows of $1.4395 but still down 1.3% on the day.
Lack of progressLack of progress
In the share markets, financial stocks bore the brunt of the falls. In late morning trade in London, Lloyds TSB was down 6.6%, Royal Bank of Scotland shares fell 11.2%, HBOS dropped 11.7% and Barclays was down 6.4%. In the share markets, financial stocks bore the brunt of the falls. In afternoon trade in London, Lloyds TSB was down 13.2%, Royal Bank of Scotland shares plummeted 20.6%, HBOS dropped 12.5% and Barclays was down 9.9%.
Earlier on Monday, the UK Government had confirmed that it was taking over B&B's mortgage portfolio, while the bank's savings business and branches were being sold to Spanish bank Santander.Earlier on Monday, the UK Government had confirmed that it was taking over B&B's mortgage portfolio, while the bank's savings business and branches were being sold to Spanish bank Santander.
"There's a feeling abroad that the US (rescue package) was a grudging affair, we were talking about this a week ago and we're not that much further on," said Peter Dixon, UK economist at Commerzbank."There's a feeling abroad that the US (rescue package) was a grudging affair, we were talking about this a week ago and we're not that much further on," said Peter Dixon, UK economist at Commerzbank.
"News that part of the Bradford & Bingley is being nationalised is not helping and there's a sense that there's a lot more bad news to come.""News that part of the Bradford & Bingley is being nationalised is not helping and there's a sense that there's a lot more bad news to come."
European shares hitEuropean shares hit
In Germany, shares in Hypo Real Estate plunged 61%. The commercial property lender announced it had struck a deal with a consortium of banks for a multibillion euro line of credit to secure its future. In Germany, shares in Hypo Real Estate dropped to 72.2% in afternoon trading. The commercial property lender announced it had struck a deal with a consortium of banks for a multibillion euro line of credit to secure its future.
Shares in Commerzbank fell 21% at one stage but recovered slightly in later trading to show a decline of 16.7%. Deutsche Bank's shares also took a battering, falling 6.7%. Shares in Commerzbank fell 21% at one stage but recovered slightly in later trading to show a decline of 19%. Deutsche Bank's shares also took a battering, falling 9%.
In France, the Cac 40 index of leading shares was down 3.1% by early afternoon there. Shares in Credit Agricole fell 7% and BNP Paribas dropped 3.7%. In France, the Cac 40 index of leading shares was down 3.9% by late afternoon there. Shares in Credit Agricole fell 12% and BNP Paribas were trading at 3.5%.
Meanwhile in Brussels, the value of stocks in Belgian-French banking group Dexia fell by nearly a third in morning trade.
Shares in the company, which acts as banker for the French local government, dropped as much as 33% in early trade but later recovered slightly. Shares were showing a loss of 23.24% in late morning trade.
Asian cautionAsian caution
A spokesperson for Dexia said its liquidity was "very good" but added the situation on the financial markets had to be "constantly monitored". Earlier in Asia, investors had remained cautious as they waited to see the detail of the US rescue package.
In Hong Kong, the Hang Seng index closed down more than 4%. Investors in Asia remained cautious as they waited to see the detail of the US rescue package. In Japan, the benchmark Nikkei 225 index closed down 1.3%. In Hong Kong, the Hang Seng index closed down more than 4%.
"Investors want to wait to see how the US plan works," said Yukio Takahashi, market analyst at Shinko Securities."Investors want to wait to see how the US plan works," said Yukio Takahashi, market analyst at Shinko Securities.
"They haven't been able to pass judgement on it yet.""They haven't been able to pass judgement on it yet."