Black Monday in London as FTSE Index plunges - Summary
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Mon, 06 Oct 2008 13:35
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London - Screens turned red on the London stock market Monday where the Financial Times Index fell dramatically as investors were digesting news of savings guarantee pledges in several European countries. Analysts said the FTSE 100 Index was on course for its biggest one-day fall in more than 20 years as a host of Britain's biggest banks were rocked by the turmoil across the European banking sector. The feverish atmosphere was fuelled by speculation that the government would announce specific measures to recapitalize ailing banks following Germany's pledge to guarantee personal savings. But speaking in parliament Monday afternoon, Alistair Darling, the Chancellor of the Exchequer, said only that the government and the Bank of England were "keeping all practical options open" in their attempts to stabilize the banking sector. Darling indirectly criticized Germany's unilateral move saying that, where possible, European governments should work together on stabilizing measures. He said it would be "wrong to speculate" on any further measures the British government might take, but pledged again that the government would do "whatever is needed" to help the banking sector. He said that 98 per cent of individual deposits held in Britain were covered by an increase in the upper limit of protection to 50,000 pounds (90,000 dollars) which comes into force Tuesday. "All practical options must remain open to us," said Darling, who also announced that the Bank of England would inject a further 40 billion pounds into the financial system Tuesday. "I havealways been clear that each country needs to do whatever is needed to deal with its own particularly circumstances. However, I also believe that wherever it is possible to do so, countries should work and act together to maintain stability," said Darling. "These are exceptional times and I'm in no doubt as to the size of the task facing us, and governments across the world, in bringing order to the financial system," he added. Meanwhile, the FTSE Index was down almost 9 per cent at one stage - representing the biggest decline since the aftermath of so-called Black Monday in October 1987. Leading bank shares were badly hit, with Halifax Bank of Scotland (HBOS), Royal Bank of Scotland and Lloyds TSB among the main losers on the stock market. "Black Mondays used to be a once-a-decade event - now they arecoming along more regularly than a London bus," said Manoj Ladwa, a trader at ETX Capital.
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