Newspaper article The Evening Standard (London, England)

Hope of Mortgage Cut as Shares Soar Again

Newspaper article The Evening Standard (London, England)

Hope of Mortgage Cut as Shares Soar Again

Article excerpt


LEADING shares soared today amid hopes that the worst of the globalcredit crunch could be over.

The FTSE 100 index of bluechip stocks was up 153.6 to 6436.9 by lunchtime. Butshares in Northern Rock suffered a rollercoaster ride as rumours swirled aroundthe stock market about a possible low takeover bid from rescuers such as LloydsTSB.

At one stage shares in the troubled mortgage bank plummeted by 20 per cent toan all-time low of 246.25p, but they later recovered to reach 286.75p, down19.25p on the day, or six per cent.

The stock market rally followed the decision by the US central bank, theFederal Reserve, to cut interest rates by half a percentage point to 4.75 percent yesterday, twice as much as expected.

Shares had already risen more than 100 points in London after the decisionyesterday afternoon and are now at their highest levels since late July, whenthe credit crisis began. Economists hope the aggressive rate-cutting in Americameans the Bank of England Brown keeps will be able to cut the cost of borrowingin Britain before Christmas, bringing relief to home owners and the highstreet.

A Northern Rock spokesman said there were no queues outside any of its 76branches today.

He said: "Across the network we are getting back to more normal transactionsfrom customers opening accounts, topping up their accounts and keeps optionsmaking withdrawals." The Fed's rate cut sent stock markets soaring around theworld. In New York, the Dow Jones Industrial Average leapt almost 336 points to13,739.39, its first 300-point gain in five years. There were big jumpsthroughout the Far East.

However, some US economists said the cut was only storing up trouble for thefuture because it would stoke inflation and encourage options open more riskyborrowing. It was claimed today Northern Rock would probably have to draw onits emergency funding with the Bank of England by the end of the week asshort-term loans fall due for repayment. …

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