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Shares rally after intervention Shares rally after intervention
(19 minutes later)
Most European and Asian shares have rallied after investors absorbed news of a co-ordinated interest rate cut. Most global stock markets have rallied after investors absorbed news of a co-ordinated interest rate cut.
Banking shares helped to push the UK's FTSE 100 index 1.7% higher while France's Cac index climbed 2.7% and Germany's Dax index added 1.9% Banking shares helped to push the UK's FTSE 100 index 1.7% higher while France's Cac index climbed 2.7% and Germany's Dax index added 1.9%.
The UK bank rescue package boosted financial shares, with HBOS up 36% and Royal Bank of Scotland adding 16%.The UK bank rescue package boosted financial shares, with HBOS up 36% and Royal Bank of Scotland adding 16%.
But Japan's Nikkei index closed lower after its prime minister urged more action to boost the country's economy. On Wall Street, the Dow Jones index opened up 1.4% but Japan's Nikkei index closed lower on fears for its economy.
The measures proposed by Taro Aso would be on top of a 2 trillion yen ($19.5bn; £11.5bn) stimulus plan already put forward. Investors grew anxious after prime minister Taro Aso urged more action to boost the country's economy - on top of a 2 trillion yen ($19.5bn; £11.5bn) stimulus plan already put forward.
We've had a few false dawns over the past couple of months and it's too early to call a complete recovery, but there's hope that these measures will get some traction at some point Richard HunterHargreaves Lansdown stockbrokers Check UK bank sharesWe've had a few false dawns over the past couple of months and it's too early to call a complete recovery, but there's hope that these measures will get some traction at some point Richard HunterHargreaves Lansdown stockbrokers Check UK bank shares
More guaranteesMore guarantees
As the turbulent week continued, in other developments:
  • The IMF head said the world economy was on the "cusp of a recession". Dominique Strauss-Kahn called on countries to work in joint action and forecast that a slow recovery would begin in the second half of 2009.
  • The British Bankers' Association said the interbank cost of borrowing overnight had fallen - a day after interest rate cuts and governments provided additional liquidity. However, longer-term lending rates rose to their highest this year.
  • Iceland suspended trading on its OMX Nordic Exchange until Monday, citing "unusual market conditions". Earlier, its largest bank, Kaupthing, became the third financial institution to be taken over by the country's government in the past week.
  • Ireland extended its guarantee of bank deposits to cover savings in Irish branches of five foreign-owned institutions Northern Ireland's Ulster Bank, British-owned First Active and HBOS, Belgium's IIB Bank and German-owned Postbank.
  • Gordon Brown wrote to G7 and EU leaders suggesting that the UK government's bank rescue plan could be a template for other nations to help unfreeze credit markets.
  • US Treasury Secretary Henry Paulson warned that some banks will still fail despite the $700bn (£406bn) rescue package to shore up the financial system.
  • Dexia shares jumped 25% after France, Belgium and Luxembourg announced they would provide state guarantees for its borrowings.
  • UK Chancellor Alistair Darling flew to the US to discuss the co-ordinated cutting of interest rates by six central banks.
  • After trading on Russian stock markets had been suspended following sharp share falls earlier this week, they were again halted - this time after stocks climbed too high after trade resumed.
As the turbulent week continued, in other developments:
  • The IMF head said the world economy was on the "cusp of a recession". Dominique Strauss-Kahn called on countries to work in joint action and forecast that a slow recovery would begin in the second half of 2009.
  • The British Bankers' Association said the interbank cost of borrowing overnight had fallen - a day after interest rate cuts and governments provided additional liquidity. However, longer-term lending rates rose to their highest this year.
  • Iceland suspended trading on its OMX Nordic Exchange until Monday, citing "unusual market conditions". Earlier, its largest bank, Kaupthing, became the third financial institution to be taken over by the country's government in the past week.
  • Ireland extended its guarantee of bank deposits to cover savings in Irish branches of five foreign-owned institutions Northern Ireland's Ulster Bank, British-owned First Active and HBOS, Belgium's IIB Bank and German-owned Postbank.
  • Gordon Brown wrote to G7 and EU leaders suggesting that the UK government's bank rescue plan could be a template for other nations to help unfreeze credit markets.
  • US Treasury Secretary Henry Paulson warned that some banks will still fail despite the $700bn (£406bn) rescue package to shore up the financial system.
  • Dexia shares jumped 25% after France, Belgium and Luxembourg announced they would provide state guarantees for its borrowings.
  • UK Chancellor Alistair Darling flew to the US to discuss the co-ordinated cutting of interest rates by six central banks.
  • After trading on Russian stock markets had been suspended following sharp share falls earlier this week, they were again halted - this time after stocks climbed too high after trade resumed.
'False dawns''False dawns'
Seven central banks on Wednesday cut interest rates in an effort to steady the faltering global economy.Seven central banks on Wednesday cut interest rates in an effort to steady the faltering global economy.
It came after the UK government's announcement of a package of measures aimed at rescuing the banking system.It came after the UK government's announcement of a package of measures aimed at rescuing the banking system.
This package makes available £400bn ($692bn) of fresh money.This package makes available £400bn ($692bn) of fresh money.
There was "an air of cautious optimism" that such measures would have some impact on the financial crisis, said Richard Hunter, head of UK equities at Hargreaves Lansdown stockbrokers.There was "an air of cautious optimism" that such measures would have some impact on the financial crisis, said Richard Hunter, head of UK equities at Hargreaves Lansdown stockbrokers.
"Banking shares have been the main beneficiaries of the UK's rescue plan, and the interest rate cuts," he added."Banking shares have been the main beneficiaries of the UK's rescue plan, and the interest rate cuts," he added.
"We've had a few false dawns over the past couple of months and it's too early to call a complete recovery, but there's hope that these measures will get some traction at some point.""We've had a few false dawns over the past couple of months and it's too early to call a complete recovery, but there's hope that these measures will get some traction at some point."
FTSE 100 INDEX: 9 October 2008*All Times GMTFTSE 100 INDEX: 9 October 2008*All Times GMT
More rate cutsMore rate cuts
Japan's benchmark Nikkei lost 0.5% or 45.83 points to close at 9,157.5.Japan's benchmark Nikkei lost 0.5% or 45.83 points to close at 9,157.5.
Shares had been ahead for most of trading after the Bank of Japan injected two trillion yen into the money markets in an effort to calm fears.Shares had been ahead for most of trading after the Bank of Japan injected two trillion yen into the money markets in an effort to calm fears.
But Mr Aso's call for further action prompted a sell-off.But Mr Aso's call for further action prompted a sell-off.
The Nikkei had suffered its biggest one-day drop in 21 years on Wednesday, with the index shedding nearly 10% of its value.The Nikkei had suffered its biggest one-day drop in 21 years on Wednesday, with the index shedding nearly 10% of its value.
In Sydney, Australia's main share index fell 1.8%, but Hong Kong's Hang Seng index added 3.3% after its central bank announced a half a percentage point cut to its interest rate, taking it to 2%.In Sydney, Australia's main share index fell 1.8%, but Hong Kong's Hang Seng index added 3.3% after its central bank announced a half a percentage point cut to its interest rate, taking it to 2%.
South Korea's stock market climbed after the central bank announced an interest rate cut of a quarter of a percentage point.South Korea's stock market climbed after the central bank announced an interest rate cut of a quarter of a percentage point.