Europe Moves Up On Central Banks' Proactive Measures To Reduces Credit Losses

September 18, 2008 7:47 a.m. EST

London, UK (AHN) - Shares in European markets turned green in Thursday's early morning trading, led by financial firms on reports that the central banks are planning to pump in more liquidity in to the money market to ease the strain on credit condition.

The Bank of Canada, the Bank of England, the European Central Bank (ECB), the Federal Reserve, the Bank of Japan, and the Swiss National Bank are going to inject an additional $180 billion worth of dollar liquidity into the short-term credit markets.

The ECB has increased its provision of U.S. dollars to the money markets by up to $110 billion by the ECB, an increase of $55 billion, and up to $27 billion by the Swiss National Bank, an increase of $15 billion.

Traders had lost confidence as they are worried about the economic downturn caused by slump in the shares of global financial firms early this week.

As of last month, so far the global stock-market has lost a value of over $19 trillion from the start of the U.S. subprime mortgage contagion.

The pan-European Dow Jones Stoxx 600 gained by 1.27 percent to 258.04 on Thursday at 12:56 p.m. GMT, reducing the year-to-date losses by 28.32 percent in 2008.

At 11:55 a.m., in late morning trade session, London's FTSE 100 index was trading higher by 83.20 points or 1.69 percent at 4,995.60 points. Frankfurt's DAX was increasing by 72.02 points or 1.23 percent at 5,933.00 points.

At the same time, the CAC 40 in Paris was trading up by 49.56 points or 1.24 percent at 4,049.67 points.

The market analysts and reports have been speculating that Washington Mutual Inc., the country's largest U.S. savings and loan, has received bids from different buyers.

Reports indicated that the financial firms including JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. may bid for acquiring stakes in Washington Mutual.

Shares of Washington Mutual surged by 14 percent to $2.29 in Frankfurt trading, after its previous closing at $2.32 in New York Stock Exchange composite trading.

The U.K.'s third-largest bank Barclays PLC, a company that was considered as one of the best suitors for Lehman, gained by 4.8 percent.

Shares of HBOS PLC, which is U.K.'s biggest mortgage lender, soared by 41 percent on the news that Lloyds TBS is likely to take over HBOS for around 12.2 billion pounds ($22.2 billion).

While Deutsche Bank AG, which Germany's largest financial institution, was trading up by 2.2 percent on Thursday.

UBS AG, which suffered the most in the U.S. subprime contagion, added by 6.4 percent in Zurich, followed by Royal Bank of Scotland moved up by 7.9 percent.