FTSE soars after US rescue plans
Updated on 19 September 2008
The FTSE 100 Index closed 8.8 per cent higher at 5311.3, its biggest-ever one-day gain, after US Treasury Secretary Hank Paulson launched a plan to rescue the world from a global banking crisis.
Financial stocks were the top performing shares, led by Natwest owner Royal Bank of Scotland which posted a 32 per cent rise, Barclays up 29 per cent and Lloyds TSB up 20 per cent.
It is the blue chip index's biggest one day rise since being established in 1984, adding £103 billion to the value of Britain's biggest companies.
The mood was similar worldwide, with Hong Kong's Hang Seng Index up 9.6 per cent and Japan's Nikkei 225 closing 3.8 per cent higher. In Europe, France's CAC 40 shot up 6.5 per cent and Germany's DAX added 3.9 per cent.
New York's Dow Jones industrials index closed 368.75 higher, or 3.35 per cent, to 11.388 after having been up as much as 463.36 during the day's trading.
The FTSE rise was also attributable to the Financial Services Authority (FSA) imposing a temporary ban on short-selling in financial stocks.
The move follows a similar crackdown on short-selling by the US Securities and Exchange Commission, announced this week.
Mr Paulson has hatched a plan to rescue banks from their billions of dollars worth of "distressed" mortgage-backed assets which have led to the crisis.
The 62-year-old former Goldman Sachs chief is also credited with the decision to offer a $110 billion lifeline to the US mortgage giants Fannie Mae and Freddie Mac.
Mr Paulson said: "We must now take further, decisive action to fundamentally and comprehensively address the root cause of our financial system's stresses.
He added: "The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy."
A US Treasury Department programme to buy mortgage-backed securities, which have been badly hurt by the housing and credit crisis, would also be expanded, Mr Paulson said.
© Independent Television News Limited 2008. All rights reserved.
These news feeds are provided by an independent third party and Channel 4 is not responsible or liable to you for the same.
