UK Offers More Loan Guarantees

123jump.com Staff
16 Jan, 2009
New York City

UK plans to provide additional guarantee of

[R]1:00AM New York, 6:00PM London - U.K. to unveil £100 billion guarantee for mortgages and corporate loans.[/R]

U.K. stocks rose today led by commodity stocks as metal prices increased. Metals and stock traders were relieved after the U.S. provided emergency funding to Bank of America of $20 billion.

However, financial stocks dragged the index as short selling resumed.

In London trading FTSE 100 index gained 0.6% or 25.95 to 4,147.06.

Of the FTSE 100 index stocks, 66 increased, 34 declined, and 2 were unchanged. Eurasian Natural led gainers in the index shares with a rise of 7.6% after gold prices increased $14 to $834 per ounce and copper prices increased to $1.5160 per ton.

U.K. to Unveil £100 billion Guarantee

U.K. Chancellor of the Exchequer Alistair Darling will next week unveil as much as a £100 billion guarantee for mortgages and corporate loans to unfreeze the credit markets and stimulate lending. UK media and Reuters first reported the news.

The package will complement the £250 billion credit line that was offered to banks in October and the £50 billion recapitalization plan.

The government believes that it is premature to aggregate all the bad loans under one bank.

FSA Investigates Madoff Fraud Links

The Financial Services Agency is investigating the involvement of funds that gathered funds for the now defunct $50 billion Bernard Madoff fraud.

The FSA is also reviewing the role of custodian banks. The report noted that the agency will seek to establish if fund strategies were deliberately misrepresented and whether financial custodian''s duties were breached.

Gainers & Losers

Eurasian Natural led gainers in the FTSE 100 index shares with a rise of 8.7% followed by increases in Rio Tinto of 7.6%, in Anglo America of 7.5%, in Rand Gold Resources Ltd. of 7.4%, and Xstrata of 6%.

Commodity stocks increased as gold prices soared $14 to $834 per ounce and copper prices jumped to $1.5160 per ton.

Barclays led decliners in the FTSE 100 index shares with a declined of 24.9% followed by losses in Royal Bank of Scotland of 13%, in Lloyds TSB Group of 4.9%, in Aviva Plc of 3.9%, and British Land Co. of 3.7%.

Barclays and other financial stocks fell as the ban on short selling stocks in U.K. financial sector companies lapsed.

HSBC shed 2.2% after it had its price estimate cut and was also downgraded to “sell” by Morgan Stanley.

Europe Markets Review

In London FTSE 100 Index closed higher 25.95 or 0.63% to 4,147.06, in Paris CAC 40 Index increased 20.87 or 0.70% to close at 3,016.75 and in Frankfurt DAX index higher 29.55 or 0.68% to close at 4,366.28. In Zurich trading SMI increased 53.10 or 0.99% to close at 5,435.54.