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Global shares sink on bank fears Global shares sink on bank fears
(about 1 hour later)
Shares in the US and across Europe have tumbled amid a string of bad news from the troubled banking sector.Shares in the US and across Europe have tumbled amid a string of bad news from the troubled banking sector.
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.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 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. In the UK the FTSE 100 index shed 5.3% to 4818.77 points, its biggest one-day fall since January.
In the US, the Dow Jones was down 2.3% Germany's Dax index closed 4.2% lower while France's Cac 40 slid 5%.
Central banks have put in extra funds to try to ease the credit squeeze.Central banks have put in extra funds to try to ease the credit squeeze.
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
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.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.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 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%. In the share markets, financial stocks bore the brunt of the falls. In London, Lloyds TSB ended the day down 13.5%, Royal Bank of Scotland shares plummeted 12.9%, HBOS dropped 18% and Barclays closed down 8.8%.
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 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. In Germany, shares in Hypo Real Estate closed down 73.9%. 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 19%. Deutsche Bank's shares also took a battering, falling 9%. Shares in Commerzbank ended down 24% while Deutsche Bank's shares also took a battering, falling 7.7%.
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%. In France, shares in Credit Agricole fell 9.2% and financial services firm Dexia ended down 28.5% on fears it might need emergency capital.
Meanwhile in Brussels, shares in Belgian-French banking group Dexia were down by about 30% on worries over its financial health.
A spokesperson for Dexia said its liquidity was "very good" but added the situation on the financial markets had to be "constantly monitored".A spokesperson for Dexia said its liquidity was "very good" but added the situation on the financial markets had to be "constantly monitored".
Asian cautionAsian caution
Earlier in Asia, investors had remained cautious as they waited to see the detail of the US rescue package.Earlier in Asia, investors had 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%.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."