Friday, September 19, 2008

Huge Gains for Global Markets; SEC Bans Short Selling For Now

Global stock markets showed strong gains today as they responded to the report of a possible U.S. government plan to rescue banks from huge mortgage debt. A temporary ban to short-selling in the United States, Britain and Ireland, also helped fuel the rebound.

Early this morning, the Securities and Exchange Commission, acting in concert with the U.K. Financial Services Authority, today took temporary emergency action to prohibit short selling in financial companies to protect the integrity and quality of the securities market and strengthen investor confidence. The U.K. FSA took similar action yesterday. Here is its announcement.

"The short-term changes to short selling are certainly giving markets and regulators room to breathe," Keith Bowman, equity analyst Hargreaves Lansdown Stockbrokers, told The Associated Press. "But there are going to be a significant number of hurdles to overcome for this temporary measure to prove useful at solving the fundamental problems over the long term."

The European Central Bank, Swiss National Bank and Bank of England announced plans today to offer a combined $90 billion into money markets.

London's FTSE was up 439.50, or 9 percent, at 8:36 a.m. Eastern. In Frankfurt, the DAX index was 312.24 higher, which represents a 5.33 percent increase. Oil prices were slightly above $100 a barrel today, with light, sweet crude for October delivery up $2.16 to $100.04 a barrel in electronic trading on the New York Mercantile Exchange by noon in Europe. Overnight, the contract rose 72 cents to settle at $97.88. The euro fell to $1.4221 in European trading from $1.4247 in New York late Thursday. The British pound dropped to $1.8019 from $1.8076, while the dollar rose to 107.40 Japanese yen from 106.19 yen.

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