Click to play videoLondon: The lack of credit in the money markets is keeping stock investors in a state of deep anxiety. In Europe, stock markets tumbled again.
However, a big sigh of financial relief came as markets finally began to stabilize. At London's FTSE, banking stocks were the big gainers.
HBOS rose nearly 30 per cent and Royal Bank of Scotland up more than 15 per cent. Stock markets seemed cautiously optimistic across Europe..but, more critically, money markets were stagnant as the libor rate remained at a record high.
Analyst David Buik says, “Still a long way to go in my opinion. Liquidity amongst banks is still far from satisfactory. All interbank markets around the world are moribund. There is still a lack of trust and confidence is shot to ribbons.”
This despite Wednesday's announcement by UK prime minister Gordon Brown to partly nationalize several banks with an $87 bn package. The prime minister urged his European counterparts to initiate similar rescue plans.
Analysts say those rescue plans, combined with rate cuts, has boosted some confidence, but it will take time to rebuild trust.
On Friday, finance ministers will meet at the G7 summit in Washington DC.
An (International Monetary Fund) IMF report prepared for the meeting warns that the global economy is headed for a serious downturn as many economies going into recession with only quote 'an extremely gradual' recovery.
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