Page last updated at 21:44 GMT, Monday, 13 October 2008 22:44 UK
Financial crisis: World round-up

World leaders have taken unprecedented action to stem the current crisis hitting the global economy. Here BBC correspondents report on how markets in their countries are reacting.

2109 GMT Sao Paulo - Gary Duffy

In Sao Paulo the Bovespa index closed up more than 14% up on Monday, at 40,829 points, finishing on the high point of the day. In part it seems this was a result of measures taken by the central bank to free more money into the Brazilian economy.

The initiative - which involved easing reserve requirements for local banks - amounted to an injection of $46bn into the financial system.

Big name Brazilian companies such the state run oil giant Petrobras and mining firm Vale both staged a rally. The rise followed a week when the Bovespa index had lost 20% of its value. Analysts said the co-ordinated response of countries around the world was having an impact.

The Brazilian currency, the real, also rose by more than 8% against the dollar, and stocks rose in other Latin American countries such as Mexico and Chile.

One worrisome footnote, with a report here suggesting the economic crisis could potentially undermine Brazil's preparations to stage the World Cup in 2014.

Big name European clubs are cancelling or delaying projects, prompting questions over how Brazil is going to find money for 10 or 12 stadiums needed in 2014.

2020 GMT MEXICO CITY - Sarah Bender

On the heels of the G7 meeting over the weekend, Mexico's stock exchange rose more than 11%, its highest rise since 1998, to end the day at 22,095.89. The peso finally gained against the US dollar, quoted at 12.41 pesos compared to 13.0525 pesos at Friday's close.

Last week President Felipe Calderon assured the country that Mexico had enough reserves and savings to weather the global crisis.

In 2009 he proposes to utilise $53bn pesos (US$4.4bn) of emergency spending on improving roads, education, hospitals and oil refineries.

He says the nation's banks are solid and that they have not slowed lending to individuals and companies, despite the credit crunch.

President Calderon claims that the US$4.4bn investment for 2009 will be used to "build infrastructure projects that will bring direct social benefits to millions of Mexicans and help keep our economy on track".

1104 GMT DUBAI - Julia Wheeler
Gulf stock markets followed the global trend on Monday, finishing up significantly.

Dubai Financial Market closed up 10.5%, in Abu Dhabi the index was up 6.9% and in Qatar the rise was 8.8%. Saudi Arabia was up around 8% with an hour of trading to go.

The rises came partly because of confidence in co-ordinated global action and bail-out plans, but also because of specific measures taken by governments in the region.

On Sunday, the United Arab Emirates cabinet moved to guarantee for three years all deposits and savings held in the country's banks. Today it has clarified that this includes international banks operating in the country.

This has been vital for confidence in the most vulnerable of the Gulf countries: the UAE has a high exposure to trade and has witnessed phenomenal growth rates in the last five years.

Meanwhile, Saudi Arabia has reduced its reserve requirement and so freed up liquidity. It has also reduced the policy rate by 50 basis points.

In Qatar, the Qatar Investment Authority, a sovereign wealth fund, has said it will support the country's banking system.

The details have yet to be announced, but this has also brought confidence to the country's market.

1030 GMT LONDON - Katie Hunt

The mood among the 550 traders frantically buying and selling at BGC Partners, a brokers based in Canary Wharf, is one of relief, says David Buik, a senior analyst at the firm.

It is a sentiment no doubt shared throughout London's trading floors.

The FTSE 100, which groups the UK's top shares, is up 205.5 points, or 5.23% at 4,137.56, bouncing back from a 21% slide last week when the index notched up its worst performance since the October 1987 stock market crash.

"There's huge relief that good sense has prevailed and there is going to be a global response to this crisis," Mr Buik says.

However, while a fan of the UK government plan to salvage the banking system, his optimism is tempered by the scale of the task at hand.

He says it will take at least three months for the bail-out to take effect and get banks lending again.

Until this time, small businesses and homeowners will still struggle to get loans and the economy will teeter on the brink of recession.

"We have to hope we are near the bottom but it's still going to be extremely painful."

"It's a good plan - it's just one year late."

1010 GMT PARIS - Alasdair Sandford

After its record fall of 22.2% last week, the Paris bourse opened up 4.5% following the announcement of the rescue plan for European banks. By late morning it had risen by more than 6%. The troubled French-Belgian bank Dexia, bailed out two weeks ago, leapt up by more than 12%.

Germany's Dax on 13/10/08
Markets appear to have rallied following last week's turmoil

It has given rise to some optimism among French banks, which pride themselves on being considerably less indebted than those in several other European countries.

"At last a crisis plan that goes to the heart of the problem," strategists at Societe Generale were quoted as saying.

"The fundamental problem banks are confronted with is finding short term finance, and guaranteeing their loans should resolve the problem of the lack of liquidity."

The details of the French rescue plan will be unveiled later. It is expected to be less ambitious than the British bail-out plan - for instance, it is thought there will not be an offer of a blanket guarantee for loans between banks - but it should go some way towards redressing the acute liquidity problem faced by many French banks.

President Sarkozy has said banks will be getting no "gifts" from the state. They will be expected to give a clear commitment to start loaning again to households and businesses.

1000 GMT MUMBAI - Prachi Pinglay

Reacting to all the measures the Indian government has put in place to curtail a market slide, the Bombay Stock Exchange has staged a 7% comeback of nearly 800 points.

Traders say the markets responded well to global developments and investors are relieved. However, the mood remains one of caution.

"This is only a pullback (rebound). It is quite natural for markets to have some bounce back after a continuous fall," stockbroker Ambarish Baliga said.

"The psychology has changed in the last few days. Earlier, people invested with a confidence that markets are only going to go up. With today's development, there is a sense of relief but it is not the same."

The sense is that as stocks recover, people will seek to sell their stocks at a reasonable price, rather than assuming they can only increase in value.

Indian markets started on a high of more than 20,000 points this year, riding on 8% growth, but have lost nearly 50% in value in the last nine months.

Traders say the confidence of investors is shaken and it is important to be cautious.

0930 GMT SHANGHAI- Quentin Sommerville

Asian stock markets have taken comfort from the global efforts to protect the world's banks.

The guarantees from European political leaders at the weekend, gave the markets renewed confidence, with banking stock leading the way. Hong Kong ended the day up 10.2% and Singapore climbed almost 7.2%. The Shanghai composite finished up 3.6%.

The Nikkei in Tokyo, which lost a quarter of its value last week, was closed for a public holiday.

But the markets here remain cautious; longer term they appear to be taking a pessimistic view. Traders are worried that even if Europe and America resolve their banking crises, their underlying economies are slowing down, which is bad news for Asian exports.

0830 GMT HONG KONG - Vaudine England

Hong Kong is hunkering down, knowing that the financial meltdown can't possibly pass this most globalised city by.

Everyone here knows the economy is profoundly vulnerable to world events. But there's little sympathy for people who have lost money on risky investments, from the Hong Kong buyers of so-called "mini-bonds" to the now unemployed high-flying bankers of the West.

The Hong Kong government has warned that recession might hit the territory in 2009, but insists it will safeguard the financial system. It even denied talk that a dip into its huge cash reserves would be necessary.

Some people are thinking about when it will be time to grab some bargains on the market. Others say it is best to hoard the savings, stay safe, while paying off the mortgage on the flat.

There is fear and worry about pensions and savings - but no sign of stress on the streets. At the weekend, members of a sports car club drove around the bays of Hong Kong island's south side with the roofs down in the late summer sun, as yachts dotted the sea.

0830 GMT GERMANY - Steven Rosenberg

When the Dax plummeted, again, at the end of last week, market analysts in Germany described the day as "Schwarzer Freitag", "Black Friday".

So far, it is "Make-up Monday". In early trading the Dax was up more than 5%.

This financial crisis is far from over, but there is relief in Germany that the graphs on the trading boards are, for now, moving up not down.

The pan-European approach adopted by eurozone leaders over the weekend has helped steady things.

And there is hope that the German government's emergency plan will shore up the banking system here. More details of the package will be announced later, but it is thought the government will pledge billions of euros to guarantee inter-bank lending, as well as injecting capital into certain banks in return for the state taking shares in those banks.

One German newspaper this morning filled its front page with a cartoon of Chancellor Angela Merkel pouring gold coins into the banking system, with the headline: "Angela Merkel saves Germany".

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