Shares mixed ahead of key US vote
Shares mixed ahead of key US vote
Global investors appear hopeful a US deal is not far off
Global shares were mixed in Wednesday trading ahead of a key vote in the US Senate on a revised version of the $700bn (£380bn) bank rescue plan.
With senators due to vote later in the day, hopes that enough changes had been made to get the bill passed saw shares close up strongly in Asia.
However, sentiment was more cautious in Europe, and while UK stocks have risen, German and French shares have fallen.
The bill needs backing by the Senate as well as the House of Representatives.
But the House of Representatives voted against the first version of the rescue deal on Monday.
As the Senate prepares for the crucial vote, the global markets have reacted as follows:
- The UK’s FTSE 100 was up 70 points, or 1.4%, at 4,973 in early afternoon trading in London
- Germany’s Dax was down 26 points, or 0.5%, at 5,805, although the fall was intensified by carmaker Daimler dropping 4.5% on fears of a profit warning
- France’s Cac 40 was 12 points, or 0.3%, higher at 4,044, after earlier posting minor falls
- Earlier on Wednesday, Japan’s Nikkei index had ended up 1% while Australia’s main index closed up 4%
- On Tuesday, the Dow Jones index of top US shares closed up 4.7%
UK stocks were also lifted by news the Bank of England is to pump a further $30bn (£17bn) into the money markets.
And banks Lloyds TSB and HBOS rose strongly – up 8.5% and 7.3% respectively – after Prime Minister Gordon Brown said he was confident Lloyds TSB’s takeover of HBOS would go ahead.
The new US package is broadly similar to the first, but includes new measures to help gain Congress’s backing.
One of the new clauses will raise the government’s guarantee on savings from $100,000 (£56,000) to $250,000.
To get through the Senate, the bill will require the backing by 60 of the 100 senators.
However, it will then have to return to the House of Representatives on Thursday.
The BBC’s Jonathan Beale, in Washington, says a positive vote in the Senate is likely to give the bill momentum when it goes back to the House.
Presidential candidates John McCain and Barack Obama, who both support Mr Bush’s efforts to bail out the economy, say they will return from campaigning to vote in the Senate.
Banks are now crying that they have ‘no money to lend” due to their over exposure in the US mortgage scandal.
And senior Democrats have pledged to find a bipartisan solution.
“Working together, we are confident we will pass a responsible bill in the very near future,” Senator Harry Reid and House of Representatives Speaker Nancy Pelosi wrote to President George W Bush.
However, some members of Congress continue to press for more fundamental changes, such as insurance for bad loans, rather than the removal of the loans from the books of financial companies, says the BBC’s Americas editor Justin Webb.
Earlier President Bush had warned of “painful and lasting” consequences for the US should Congress fail to agree a rescue plan.
Analysts say the Senate is more likely to pass the bill because senators are not facing the same pressure from voters – who are generally opposed to the bailout – as members of the House.
All representatives face re-election in November compared with only one-third of senators.
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