three-month London interbank offered rate, or Libor, which banks charge each other, rose the most since 1999.
Stocks in Asia and Europe fell on Friday and the world’s central banks intensified their liquidity injections into parched money markets as news of gridlock in Washington led investors to wonder if the United States financial bailout plan might run afoul of election-year politics.Futures indexes on Wall Street also pointed to a lower opening.Asian markets led the day with declines in most markets, and Europe followed when markets opened there. But the negative sentiment was mitigated somewhat by the widespread assumption among investors that the collapse of negotiations over the United States rescue plan was a delay, rather than a failure.
Nonetheless, the financial world found itself once again contemplating both the limits of central banks to break an acute crisis mentality in the absence of a political solution, and the economic consequences of no bailout at all.“The psychology is that the markets have priced in this plan,” said a senior executive at a major European financial services company, who did not wish to be named because of the sensitivity on the market of the ongoing negotiations. “If that were not to happen I think it would be the beginning of a very serious downturn.”In London, the FTSE 100 was down 100 points or nearly 2.1 percent by midday trading. In Frankfurt, the DAX was down 2.3 percent and in Paris, the CAC 40 was down 2.4 percent.
In Asia, where the declines were smaller, Japan’s Nikkei index lost 0.9 percent. The Hang Seng in Hong Kong fell by 1.3 percent.
To help ease the immense pressures on credit markets, global central banks on Friday expanded the program announced last week to lend dollars in key financial centers around the world. In a crucial change, they began to lend new dollar-denominated funds for a week, rather than only for overnight lending.Banks borrowed $35 billion from the European Central Bank, $30 billion from the Bank of England and $9 billion from the Swiss National Bank.Overnight, the Federal Reserve increased by $13 billion to $277 billion currency swap facility that allows other central banks to lend dollars.The three-month London interbank offered rate, or Libor, which banks charge each other, rose the most since 1999.
Nonetheless, the financial world found itself once again contemplating both the limits of central banks to break an acute crisis mentality in the absence of a political solution, and the economic consequences of no bailout at all.“The psychology is that the markets have priced in this plan,” said a senior executive at a major European financial services company, who did not wish to be named because of the sensitivity on the market of the ongoing negotiations. “If that were not to happen I think it would be the beginning of a very serious downturn.”In London, the FTSE 100 was down 100 points or nearly 2.1 percent by midday trading. In Frankfurt, the DAX was down 2.3 percent and in Paris, the CAC 40 was down 2.4 percent.
In Asia, where the declines were smaller, Japan’s Nikkei index lost 0.9 percent. The Hang Seng in Hong Kong fell by 1.3 percent.
To help ease the immense pressures on credit markets, global central banks on Friday expanded the program announced last week to lend dollars in key financial centers around the world. In a crucial change, they began to lend new dollar-denominated funds for a week, rather than only for overnight lending.Banks borrowed $35 billion from the European Central Bank, $30 billion from the Bank of England and $9 billion from the Swiss National Bank.Overnight, the Federal Reserve increased by $13 billion to $277 billion currency swap facility that allows other central banks to lend dollars.The three-month London interbank offered rate, or Libor, which banks charge each other, rose the most since 1999.
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