Global markets fall amid Lehman uncertainty
by Kay Murchie
Within the first few minutes of trading today, the London Stock Exchange opened down 2.5% following the uncertainty surrounding Lehman Brothers, the fourth largest investment bank in the world.
The 158-year-old financial institution is filing for bankruptcy protection after announcing it had failed to find a solution to its problems after a weekend of rescue talks with Barclays and Bank of America.
US bankruptcy proceedings allow a business to continue trading whilst receiving protection from its creditors.
The bank has a workforce of 4,000 in London, many of which now face the prospect of losing their jobs. It is also believed that the crisis could trigger a cull of tens of thousands of other jobs across the financial industry.
In a bid to allay fears in the UK markets, the Bank of England has injected £5 billion into the short-term money markets, to protect against fears that financial markets will come to a standstill should other banks be weary of the misfortune of Lehman.
The European Central Bank announced it would become involved in eurozone money markets if necessary.
Alan Greenspan, the former chairman of the US Federal Reserve, recently warned that other major firms could fail and described the current global banking crisis as possibly the worst in 100 years.
Meanwhile, in Asia, the key Australian share index ended down 1.8%, while in Singapore the STI fell 2.3% in morning trading.
France’s Cac 40 index lost 3.4% and Germany’s Dax fell 2.8%. In Taiwan, the benchmark share index closed down 4%, and in India share prices lost over 5% on opening.
The news of Lehman’s collapse comes as Merrill Lynch announced it had reached a £24.4 billion deal with Bank of America.
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