Yesterday's trading: Nations united to stop the rot
That's it then, panic over. Synchronised global efforts to restore confidence in the clogged up banking system appeared to at last do the trick.
Geoff Foster: Daily Mail
In other words, it stopped the rot and helped resuscitate world stockmarkets, which on Friday were staring into the abyss.
A momentous Monday saw British banks tapping the taxpayer for emergency funding, European bigwigs agreeing a bailout that could be worth hundreds of billions of pounds and the US Federal Reserve pledging to flood the market with dollars.
The Treasury's decision to pump £37bn into the Royal Bank of Scotland and Lloyds TSB/HBOS in an attempt to prevent the financial crisis triggering a deep recession, brought huge sighs of relief.
However, when the market realised that taxpayers, who will get a 60pc stake in RBS and 40% of the merged HBOS/Lloyds TSB, will not receive any dividends for quite some time, heavy selling ensued in all three affected banks.
Rumours that dealings in banks shares would be suspended in order to give the City more time to examine the terms of the government's historic rescue proved wide of the mark.
Instead, dealings began on the dot at 8am and Royal Bank of Scotland was immediately buried under a mountain of selling. It was sold down to an incredible all-time low of 49.6p before closing 6p lower at 65¾p.
HBOS crashed 34¼p to 90p after Lloyds TSB (27.4p down at 162p) announced revised merger terms. HBOS investors will now receive 0.605 Lloyds shares for every HBOS share they hold compared with the original offer of 0.833 Lloyds per HBOS share. The new offer values HBOS at 97p a share or £5.1bn.
After its worst ever weekly fall of 21%, the bombed out Footsie bounced back strongly following the unprecedented part-nationalisation of three UK major banks. It closed 324.84 points, or 8.26%, higher at the day's best of 4,256.9. The FTSE 250 jumped 252 points to 7,030.35. Wall Street's reaction to last week's massacre was even more spectacular. It flew 597 points higher in early trading after Morgan Stanley wrapped up a revised £4.5bn deal with Mitsubishi Financial of Japan and shares of General Motors and Ford moved into the fast lane amid talk of a mega motor merger.
Teun Draaisma, Morgan Stanley's global equity strategist, said: 'We are moving a further 2% from cash into equities leaving us 5% overweight. We still have a lot of dry powder but believe when there is panic, drastic policy action and attractive valuations, you should buy a bit more.'
International bank Standard Chartered advanced 200½p to 1200p after saying it meets all capital requirements and it does not intend to raise capital under the UK's recapitalisation scheme.
TUI Travel rose 40¼p to 232¼p after its parent company TUI AG, which holds 51% of TT, sold its 100% owned Hapag Lloyd container shipping business for €4.45bn to a Hamburg based consortium.
AMEC advanced 56½p to 525½p after boss Samir Brikho bought 50,000 shares at 497.1p.
Property group Great Portland Estates touched 275¼p and closed 14p off at 280p amid fears that well respected chief executive Toby Courtauld could be headhunted to replace Stephen Hester at British Land, 12p better at 686p. Hester is replacing Sir Fred 'the Shred' Goodwin at RBS.
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Martin Hughes, boss of hedge fund Toscafund Asset Management, is sitting on a nasty paper loss after selling down his 10% stake in beleaguered housebuilder Taylor Wimpey, a further 3p lower at 17¾p. The housebuilder is still trying to renegotiate its £1.7bn debt pile but recently warned it could take until early in the new year.
Oil equipment services group Hunting gushed 16p to 529p. Riverstone, a New York-based equity house, in which former BP chief executive Lord Browne has an interest, has agreed to buy Hunting's Canadian interests for £626m. But Hunting's total market capitalisation is now only £698m so dealers believe there is a chance that Riverstone could have a rethink and bid for the entire group.
Strategic Equity Capital jumped 4½p to 36p after director Sir Clive Thompson bought 30,000 shares at 34½p.
Spreadbetting group IG, which has raised its margin requirements for all clients, added 31&rac34;p at 293p.
Immunodiagnostic Systems rose 31p to 230p after Oriel Securities advised clients to buy following an upbeat pre-close trading update. The company expects half-year sales growth of 84.5%, or £12.5m. The board remains confident for the financial year as a whole.
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