- Title: VARIOUS: Cautious optimism in Europe over US Senate bank bailout approval
- Date: 2nd October 2008
- Summary: (BN06) LONDON, ENGLAND, UK (OCTOBER 2, 2008) (REUTERS) WIDE OF SHARES ELECTRONIC TICKER SHOWING NIKEI STOCKS CLOSE UP OF TICKER
- Embargoed: 17th October 2008 13:00
- Keywords:
- Topics: International Relations,Finance
- Reuters ID: LVAG09KBLUG6BTCWPWZ0TY0RQNP
- Story Text: European stocks rise, welcoming news of U.S. Senate's approval of $700 billion bank bailout package. Battles ahead of similar plan for European banks.
European shares rose in early trading on Thursday (October 2) as banking stocks gained after the U.S. Senate approved a $700 billion bailout package.
There is relief in Europe that senators overcame political differences to pass the rescue package. It now needs the Congress to approve the plan, after it rejected it earlier this week.
Howard Wheeldon, city analyst with BGC Partners said: "Absolutely delighted that the Senate has achieved fellowship that we need to sort this crisis out, now we have got 18 hours before the same I hope through Congress tonight, so a little bit more nail biting to do but we are half way there and I think the markets will take a very positive view from that this morning, the Congress doesn't go against the Senate lightly."
European leaders are now mulling the idea of a U.S.-style financial rescue fund for Europe as EU governments went their separate ways in response to the global credit crisis.
The European Commission appealed for more consistency in deposit guarantee schemes and stronger pan-European financial supervision, but the apparent discord between Paris and Berlin underlined the difficulty of finding a common approach.
Wheeldon said Europe needs to be ready for a worsening of the credit crunch, but it does not need to panic just yet.
"All of the European community have to come together and prepare for the possibility, although we have to remember that Europe is not in nearly as bad a situation as the U.S. So the U.S. was key to this, but we should be ready just in case. I actually don't think it is going to be necessary, I think the individual countries that play hard in the financial markets are doing their bit and the central banks are also doing their job, so we shouldn't rush into this," he said.
A European government source said Paris had floated the idea of a 300 billion euro ($425 billion) EU rescue fund ahead of a meeting of leaders of the four big European powers and top EU officials tentatively set for Saturday in Paris.
This week's decision by Ireland to guarantee all deposits in Irish banks infuriated Britain, sucking money away from British banks where the guarantee is more limited, and drew fire from Brussels.
Drawing one lesson from the credit crisis, the Commission proposed legislation on Wednesday to force banks to tie up more capital to cover risky operations, and to limit how much they can lend to one party. - Copyright Holder: REUTERS
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