Europe Markets 2 - Merkel on rescue plan, Barosso says 'light at end of tunnel
NAME: EUR MARKETS 2 20081014I
TAPE: EF08/1045
IN_TIME: 10:11:25:04
DURATION: 00:03:02:01
SOURCES: AP TELEVISION/ EBS
DATELINE: Various - 14 Oct 2008
RESTRICTIONS:
SHOTLIST
AP Television
Berlin, Germany
1. German Chancellor Angela Merkel walking onto stage
2. Wide of stage
3. Cutaway audience at metal industry congress
4. SOUNDBITE (German) Angela Merkel, German chancellor
"We will insist very quickly, and we are in agreement with other EU members which belong to the G8, to act together with the big emerging countries. That is why we will insist at the upcoming EU-Canada summit, the French president will bring it up, to have such meeting in this year already."
EBS
Brussels, Belgium
5. Wide of EU Commission President Jose Manuel Barroso at podium
6. SOUNDBITE: (English) Jose Manuel Barroso, EU Commission President:
"This is, as I said earlier, an unprecedented crisis and this is precisely the reason why I have called for unprecedented efforts of coordination. This is of course something that requires unprecedented European Union action and we have created nothing less than a community package for financial recovery and future sustainability. But let me be clear: this is and remains work in progress. We see light at the end of the tunnel but we are not yet there."
7. Wide of press conference
AP Television
London, Britain
8. Tilt down of skyscraper in Canary Wharf district
9. Tilt down from skyscrapers, to Underground station, commuters emerging
10. People walking out of Canary Wharf station
11. Electronic strip showing share prices
12. Various of trading floor at BGC Voice and Electronic Brokerage firm
AP Television
Frankfurt, Germany
13. Wide of German Stock Exchange
14. Mid of traders
15. Various of electronic board showing index rising
AP Television
Moscow, Russia
16. Exterior of Moscow Interbank Currency Exchange (MICEX) building
17. Various of trading floor inside MICEX
STORYLINE
Stock markets in Europe and Asia rose strongly for a second straight day on Tuesday after Wall Street rallied from its worst week ever on mounting evidence that government attempts to shore up the world's battered financial system are beginning to thaw frozen credit markets.
On Tuesday, German Chancellor Angela Merkel called for further international coordination, involving countries like China, India and Japan, and called for a further top level meeting to be held by the end of this year.
Addressing a congress of German metal industry representatives, she said that immediate rescue measures must be followed by new international rules that would, for example, improve the work of rating agencies.
EU Commission President Jose Manuel Barroso also said Europe can bounce back from the financial crisis if it takes the right decisions now to prevent a repeat.
He said the "unprecedented coordination" between European governments and central banks in deciding banking guarantees and interest rate cuts has helped in creating a package for financial recovery.
In London, the FTSE 100 index of leading shares was up 255.08 points, or 6.0 percent, at 4,511.98, despite news that inflation in Britain is running at a 16-year high.
Germany's DAX was up 257.46, or 5.1 percent, at 5,319.91 even though a group of leading German economic think tanks said Tuesday that Europe's largest economy is on the brink of a recession.
The CAC-40 in France was 199.21 points, or 5.6 percent, stronger at 3,730.71.
Russia's stock markets joined the surge on Tuesday, prompting regulators to suspend trading on one of the two major exchanges.
The MICEX, where most of Russia's trading takes place, climbed 11.2 percent before trading was halted for an hour.
The RTS climbed 6.4 percent.
Britain's government injected an unprecedented 37 (b) billion pounds (63 (b) billion US dollars) into some of the country's leading banks to avoid a full-scale collapse of the sector and restore confidence.
In return for the rescue, the Royal Bank of Scotland Group PLC, Lloyds TSB Group PLC and HBOS PLC will cede major stakes to the government and halt cash bonuses for bank board members this year.
The banks also will be required to lend more money to small- and medium-sized businesses and homeowners in a bid to rescue the country's housing market.
The deal will leave taxpayers owning as much as 60 percent of RBS and 43.5 percent of the merged Lloyds HBOS bank - the two are in the process of combining.
While concerns still linger, investors were encouraged that governments appeared to be taking steps to tackle one of the core problems, helping to revive bank-to-bank lending, which has almost ground to halt because of fears about repayment due to enormous losses from souring mortgage-linked debt.
The resurgence in the markets followed the announcement Monday by European government of 1.7 (t) trillion Euro set of national packages to save ailing banks, and the confirmation that the US will follow suit and buy stakes in nine US financial institutions.
The action by Germany, France, the Netherlands, Spain, Portugal, Austria and Britain came after weeks in which the governments often acted independently - a piecemeal approach that failed to stop steep and frightening slides on financial markets.
Late Monday in the US, government officials and industry executives said the Bush administration would use 250 (b) billion US dollars of the 700 (b) billion US dollar bailout program recently passed by Congress to buy into American banks.
The government initially will buy stock of nine large banks, but the program is expected to be expanded to many others.
US President George W. Bush planned to announce the details before Wall Street opens.
The long-term key is whether the flurry of activity can actually break the logjam in credit markets and the early indications are that there has been some easing in rates and spreads.
The interbank lending rate for three-month euro loans, known as the Euro Interbank Offered Rate, or Euribor, fell 0.08 percentage points to 5.24 percent from 5.32 percent the day before.
Rates had fallen on Monday as well, but by a more modest 0.06 percentage points.