Driven by massive gains in banks after the US government announced a plan to fight the global credit crunch, European stocks closed at exceptional highs on Friday. In London, Paris and Frankfurt stocks recorded rises from 5 to 9%.
European stocks soared Friday, driven by massive gains in the banks after the US government announced a plan to cordon off the debt and toxic investments at the heart of the global credit crunch.
In London, the FTSE 100 index of leading companies rose 8.84 percent to close at 5,311.30 points.
In Paris, the CAC 40 jumped 9.27 percent, its largest one-day gain, to 4,324.87 points, and in Frankfurt, the DAX was up 5.56 percent at 6,189.53 points.
All three markets easily regained key support levels that had been breached earlier in the week in some of the most tumultuous trading on record.
Dealers said the banks -- many posting gains of 30 and 40 percent -- were in focus as Washington prepared a plan to tackle the mountain of bad debt that has weighed them down in the past year and sparked a global credit crunch.
Meanwhile, the US Securities and Exchange Commission banned the short selling of shares in financial companies so as to remove some of the speculative pressures on them.
That followed similar action in Britain, Ireland and Switzerland.
Short-selling is when an investor borrows a stock or investment instrument and sells it on the belief it will fall in price, allowing them to buy it back later more cheaply and so make a profit.
On Wall Street, stocks charged ahead, opening with a gain of 3.58 percent, having added 3.5 percent Thursday as news of the US government plan came through.
Officials from the US Treasury, Federal Reserve and Congress met to discuss a "comprehensive approach" to rid financial institutions of bad assets at the root of the current credit crisis, Treasury Secretary Henry Paulson said.
"Overnight, the game changed," said John Wilson at Morgan Keegan, adding: "We hope this is the beginning of something major.
Paulson said Friday the plan would involve hundreds of billions of dollars.
Date created : 2008-09-19