Page last updated at 15:56 GMT, Friday, 24 October 2008 16:56 UK

Governments tackle market crisis

The Micex stock exchange
Trading on the Russian Micex was suspended on Friday after heavy falls

Policy makers around the world have taken steps to ease the impact of the financial crisis on their stock markets, currencies and economies.

The Turkish Central Bank auctioned $50m on Friday designed to prop up its ailing lira currency with further daily dollar auctions in the pipeline.

Elsewhere, Denmark's central bank raised rates to 5.5% from 5% to halt the crown's slide against the euro.

Meanwhile, the IMF has said it will give $2.1bn (1.3bn) in aid to Iceland.

It reached a "tentative" agreement, the IMF said. After the collapse of its banking system earlier this month as a result of the global credit crisis, Iceland is facing severe financial strain.

Other countries in talks with IMF officials over loans include Hungary, Belarus, Ukraine, Serbia, Pakistan and Turkey.

Earlier this week, Hungary's central bank unexpectedly raised interest rates to 11.5% from 8.5% to support the Hungarian forint.

The European Central Bank on Thursday said it would lend the Hungarian central bank up to 5bn euros to back its cash loans to domestic banks.

Investor flight?

Pressure is growing on authorities in emerging economies and small countries to intervene in markets.

Fears exist that without intervention investors will flee from riskier and smaller countries, putting their economies at risk.

In Russia, the government is spending billions of roubles every day to provide access to credit for banks and prevent its currency from diving.

But these moves have not helped to stem the sell-off in the country's shares, with the RTS index losing 10% and the Micex sinking 14% on Friday before trading on both indexes was suspended until 28 October.

Analysts blame the sharp stocks falls on the huge liquidation of positions as banks, which have been using stock as collateral for loans, make a flurry of margin calls.

Meanwhile, Finland signalled that it was preparing to reverse its policy of the past few years of privatisation and buy shares in local firms to support the economy.

The government plans to create an investment vehicle through which 5.6bn euros ($7.1bn; 4.5bn) of minority stakes would be shifted to give the state more flexibility, Ownership Steering Minister Jyrie Hakamies told Reuters.



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MARKET DATA - 11:36 UK

FTSE 100
5429.64up
23.70 0.44%
Dax
5733.05up
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Cac 40
3784.02up
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35.31 1.58%
BBC Global 30
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