European Markets Rise 11%, Asian Up 7%

123jump.com Staff
13 Oct, 2008
New York City

Stocks in Europe surge 11%, in Asia close up 7% and in New York soar 6%. European governments decided to inject large sums of capital in banks and banking system. Crude oil price rebound 4% lifting the energy complex stocks around the world. Banks rise in the U.S. and Europe. UK banks trade mix.

[R]12:20AM New York – World markets surge after European governments agree to inject large amount of capital.[/R]

Stocks in Asia, Europe and New York surged on the optimism that the recent capital injection commitment from the governments of Europe will bolster banking system, support confidence among depositors and prevent widening of the current banking crisis into the broader economy.

Over the weekend, European leaders met in Paris to discuss common action and a broader framework at approach in the region that covers fifteen nations that use a common currency euro. Even though, the leaders in Paris meeting agreed on a broad framework of capital injection in banks and banking system the initial steps appear to bolster advantage for national banks. The nations compete in Euro-wide region to attract bank deposits. Ireland and Germany guaranteed all deposits at local bank branches and UK raised its limit to 50,000 pounds.

Germany committed 400 billion euros to support its banks and may commit as much as 100 billion and invest directly in banks.

Interbank lending rate in London for dollar deposits declined to 4.75% from 4.82% on Friday. The decline came after the European governments pledged inject in banking system.

UK banks appear to weaker than first anticipated. UK Treasury may have to inject direct capital in to the troubled mortgage lender HBOS and the government assisted deal with Llyods TSB Plc may collapse. Royal Bank of Scotland may need immediate cash injection of as much as 12 billion pounds from the government and the company will retire its chief executive Fred Goodwin is likely to be replaced.

European Banks Rise

Banks in European trading closed higher in UK, France and Germany.

UBS AG ((UBS)) rose 10.3% to Sfr18.7 in Zurich trading and gained $1.48 to $16.77 in New York trading. Credit Suisse ((CS)) in New York surged 20% or $7.09 to $39.04. Royal Bank of Scotland ((RBS)) dropped 7.4% or 5.20 to 66.70 pence and Barclays Plc rose 0.2% to 207 pence. Societe Generale declined 4.4% or 2.23 euros to 47.77 euros.

Market fears dragged Societe Generale to a 66-month low on the worries that the bank may need injection of capital.

Royal Philips Electronics NV ((PHG)) dropped as much as 8% before recovering to a close of 4.2% of 15.13 euros.

Metals and Miners Rise

ArcelorMittal ((MT)) rose 18.8% or 4.12 euros to 26.04 euros after Societe Generale raised its stock rating to ‘buy’ from ‘sell.’

BHP Billiton ((BHP)) surged 11% or $4.44 to $41.68 after crude oil futures prices gain. The immediate month delivery future prices rose 3.5% or $2.70 to $80.41. Rio Tinto Plc ((RTP)) rose $22.36 to $194.15. In New York trading U.S. Steel ((X)) dropped $1.78 to $46.40 and Nucor Corp ((NUE)) $3.35 to $34.12.

Gold in New York trading dropped $24 to or 2.8% to $835 an ounce. Yield on 10-year U.S. bond rose 3.98% and 30-year bond hovered at 4.14%.