World markets down on Lehman, Merrill woes
Wednesday, 17 September 2008
WASHINGTON, Sept 16 (Agencies): Urgently trying to keep cash flowing amid a Wall Street meltdown, the Federal Reserve on Tuesday pumped $50 billion into the nation's financial system to help ease credit stresses.
The Federal Reserve Bank of New York's action comes in addition to its regular market operations to inject $20 billion into the system slated for the day.
The manoeuvre takes place as Federal Reserve Chairman Ben Bernanke and his central bank colleagues prepare to meet to decide their next move on interest rates and conduct a fresh assessment of the country's financial and economic troubles.
Some believe the financial system turmoil raises the odds the Fed will cut rates. Others still predict the Fed will hold its key rate steady at 2 per cent.
In the last few days, the American financial system has been badly shaken as bad bets on dodgy mortgage-backed securities claimed more Wall Street giants.
Lehman Brothers, the country's fourth-largest investment bank, filed for bankruptcy protection. A weakened Merrill Lynch, deciding it couldn't go it alone anymore, found help in the arms of Bank of America. Now, the insurance giant American International Group is dangerously wobbling. Against this backdrop, Wall Street on Monday plunged 500 points, the most since the September 2001 terror attacks.
Meanwhile, world stock markets swooned again Tuesday as the global financial crisis caused investors to worry that asset prices have yet to hit rock bottom.
In early afternoon trading, Paris' benchmark CAC-40 index was down 1.41 percent, Germany's DAX 30 index of blue chips was down 1.62 percent and the FTSE-100 share index was 3.17 percent lower in London.
Financial stocks across Europe took a pounding for the second day running as the collapse of U.S. investment bank Lehman Brothers and credit downgrades of American International Group Inc., the world's largest insurer, stoked investor fears of wider financial and economic damage.
Earlier, Asian stock markets plummeted, playing catch-up with other markets around the world after a holiday Monday kept Tokyo and Hong Kong bourses closed on the day Wall Street's landscape was dramatically changed.
Tokyo's Nikkei 225 index sank nearly 5 percent to 11,609.72, its lowest close since July 2005. Hong Kong's blue-chip Hang Seng Index shed 5.4 percent to its lowest point in nearly two years.
The Federal Reserve Bank of New York's action comes in addition to its regular market operations to inject $20 billion into the system slated for the day.
The manoeuvre takes place as Federal Reserve Chairman Ben Bernanke and his central bank colleagues prepare to meet to decide their next move on interest rates and conduct a fresh assessment of the country's financial and economic troubles.
Some believe the financial system turmoil raises the odds the Fed will cut rates. Others still predict the Fed will hold its key rate steady at 2 per cent.
In the last few days, the American financial system has been badly shaken as bad bets on dodgy mortgage-backed securities claimed more Wall Street giants.
Lehman Brothers, the country's fourth-largest investment bank, filed for bankruptcy protection. A weakened Merrill Lynch, deciding it couldn't go it alone anymore, found help in the arms of Bank of America. Now, the insurance giant American International Group is dangerously wobbling. Against this backdrop, Wall Street on Monday plunged 500 points, the most since the September 2001 terror attacks.
Meanwhile, world stock markets swooned again Tuesday as the global financial crisis caused investors to worry that asset prices have yet to hit rock bottom.
In early afternoon trading, Paris' benchmark CAC-40 index was down 1.41 percent, Germany's DAX 30 index of blue chips was down 1.62 percent and the FTSE-100 share index was 3.17 percent lower in London.
Financial stocks across Europe took a pounding for the second day running as the collapse of U.S. investment bank Lehman Brothers and credit downgrades of American International Group Inc., the world's largest insurer, stoked investor fears of wider financial and economic damage.
Earlier, Asian stock markets plummeted, playing catch-up with other markets around the world after a holiday Monday kept Tokyo and Hong Kong bourses closed on the day Wall Street's landscape was dramatically changed.
Tokyo's Nikkei 225 index sank nearly 5 percent to 11,609.72, its lowest close since July 2005. Hong Kong's blue-chip Hang Seng Index shed 5.4 percent to its lowest point in nearly two years.