FTSE rebounds but bailout fears still stalk market
Tuesday, 07 Oct 2008 22:28
Global markets unsteady on Tuesday following yesterday's unprecedented falls
The FTSE 100 has closed slightly up after a volatile day of trading on markets across the world.
Banking stocks took a hammering in London, one day after the index recorded its worst daily fall for more than two decades.
At close it had risen 16 points to 4,605.22, buoyed slightly by a calmer opening on Wall Street.
But as the FTSE 100 was closing, the prime minister was holding an emergency economic summit at No 10 with the chancellor and the governor of the Bank of England.
Gordon Brown, Alistair Darling and Mervyn King, as well as Financial Services Authority chief Lord Turner are meeting to discuss the turmoil in UK banking shares.
As uncertainty stalked the market, HBOS closed 41 per cent down at 94p while Royal Bank of Scotland (RBS) shares also dropped to under a pound, ending the day 39.23 per cent lower at 90p.
Lloyds TSB shares lost 12.93 per cent of their value, while Barclays also saw its stock fall 9.24 per cent to 285p.
Rumours of a £50 billion banking bailout, which could see stocks in the banks diluted, sent shares in all four plummeting.
RBS and Barclays both strongly denied the stories.
In a statement to the stock exchange earlier today, RBS said: "Contrary to press speculation, RBS did not make a request to government for capital."
Barclays chief executive John Varley told an investors' conference this morning: "Contrary to press rumours, Barclays has not requested capital from the government and has no reason to do so."
The Dow Jones gained about 145 points just after the open but fell nearly 40 points in late morning trading.