Doubts over US bail-out to hit shares

Published By: Mathew White On Tuesday 23 September 2008

Print This Article

European shares are set to fall on growing scepticism about Washington's rescue plan for the ailing financial sector.

The planned $700 billion (£377 billion) rescue package to shore up the embattled US financial system looked set to drag into next week as US lawmakers discuss how exactly they could make Wall Street pay for the bail-out.

Christopher Gore, sales trader at IG Markets said: "Hopes that the US government's $700 billion bail-out plan would provide a miracle cure quickly faded overnight as shares slumped."

Asian shares fell and and major European stock markets were expected to open down as much as 1 per cent according to financial bookmakers.

Asia-Pacific shares outside of Japan slipped 1.9 per cent, though it remained well above a two-year low hit on Thursday.

Australia's benchmark S&P/ASX 200 index was down 2.3 per cent, with bank stocks and shares of mining firm BHP Billiton the biggest drag.

Mr Gore said: "Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke plan to buy back bad mortgage backed assets from banks and investment firms in order to stabilise the financial system.

He added: "The lack of specifics however has not convinced investors as well as there being no current market for such assets with no one knowing just how much such assets are really worth."

November crude oil futures were down slightly around $109 a barrel, after rising nearly $7 overnight on the weaker dollar.

The October contract, which expired on Monday, soared 16 per cent in its biggest one-day gain ever.

Source: ITN.co.uk

Read More Headlines right now