LONDON: The global financial firestorm tore through markets yesterday, sending US and European shares plunging following a huge US bailout of insurer AIG and news that British bank HBOS could be taken over.
Wall Street fell hard on fears the US Federal Reserve’s $85-billion (60-billion-euro) loan to American International Group might not be sufficient to shore up wobbly financial markets. The Dow Jones Industrial Average fell 2.48 percent to 10,785.20 while the tech-heavy Nasdaq was down 3.47 percent to 2,138.06 in mid-afternoon deals.
The bailout for AIG, one of the world’s biggest insurers, and news that HBOS was in advanced takeover talks with rival Lloyds TSB had earlier cheered Asian and European exchanges.
In London, the FTSE 100 index tumbled 2.25 percent to 4,912.40 points, while in Paris the CAC-40 lost 2.14 percent to 4,000.11 points. The Frankfurt DAX was down 1.75 percent at 5,860.98 points.
Earlier in the day Asian stocks ended mixed. Markets in Seoul and Tokyo managed to reverse early losses and closed with respective gains of 3.0 percent and 1.21 percent.
But Hong Kong, which had opened 2.1 percent higher, fell back and closed 3.6 percent down, beneath 18,000 points and at its lowest level since October 4, 2006.
Republican White House hopeful John McCain blasted US regulatory agencies as “asleep at the switch,” blaming them for the massive AIG bailout that he agreed was necessary.
House of Representatives Speaker Nancy Pelosi railed against what she called “our nation’s largest bailout ever.”
Gold prices jump
Gold prices advanced yesterday as the precious metal continued to garner support from ongoing turmoil on world financial markets, traders said.
On the London Bullion Market, the price of gold rose to $834.02 per ounce, from $779.50 late on Tuesday. “What we are seeing today is safe-haven buying in the marketplace,” said metals analyst James Moore at TheBullionDesk.
US crude oil futures were higher at midday yesterday. On the New York Mercantile Exchange at 12:50 p.m. EDT (1650 GMT), October crude was up $2.35, or 2.58 percent, at $93.50 per barrel, trading from $91.36 to $95. In London, November Brent was up $2, or 2.24 percent, at $91.22 a barrel, trading from $89.03 to $93.21.
