Rescue plan steadies stock market

The London stock market steadied today as traders attempted to digest yesterday’s dramatic efforts to tackle the global financial crisis.

The London stock market steadied today as traders attempted to digest yesterday’s dramatic efforts to tackle the global financial crisis.

The FTSE 100 Index was more than 1.5% higher after interest rate cuts in South Korea, Hong Kong and Taiwan fuelled a modest recovery for Asian markets.

Recession fears caused London’s blue-chip index to plunge more than 5% on Wednesday, despite the Government’s bail-out of the banking industry and a 0.5% cut in the Bank of England base rate to 4.5%.

The fall wiped £57bn (€71.7bn) from leading stocks and sent the top-flight index crashing to 4366.7 – its lowest close since August 2004. The FTSE also fell 7.8% on Monday – its biggest one-day percentage fall since Black Monday in 1987.

But the Treasury’s rescue plan boosted banking shares today, with HBOS and Royal Bank of Scotland up 16% and 19% respectively.

However, CMC Markets dealer Matt Buckland warned that markets were likely to remain volatile.

He said: “There’s so much uncertainty as to what happens next and such a great reliance on seeing those interbank rates come down that until we see any real progress here, normality in equity markets does still seem to be some way off.”

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