Financials lead surge in world markets after US mortgage move

United KingdomLondon- Financial stocks led a rally on almost all world stock markets Monday, caused by the US government's decision to take control of embattled mortgage backers Fannie Mae and Freddie Mac.

The only significant market indices to buck the trend were China's Shanghai Composite and the smaller Shenzhen Component, which fell 2.7 and 3.0 per cent respectively.

In London, Halifax Bank of Scotland (HBOS) was the strongest performer, gained as much as 15 per cent, with Royal Bank of Scotland and Barclays rising more than 14 per cent.

The leading FTSE 100 index was typical of other major European indices, surging close to 4 per cent in the first hour and then levelling off.

In Frankfurt the DAX index of the 30 top German shares clawed back much of last week's losses, the worst this year. Deutsche Bank was up 8 per cent, while the DAX as a whole rose 3.4 per cent by mid-afternoon.

In Paris, the CAC 40 was up 4.7 per cent, repeating the Europe-wide pattern.

Smaller markets in Nordic capitals, Amsterdam, Vienna, Madrid Warsaw and Prague posted rises of between 3 and 4 per cent, with banking stocks leading the way.

In Asia, Tokyo's benchmark Nikkei 225 Stock Average jumped 412.23 points, or 3.4 per cent, to close at 12,624.46.

Japanese Finance Minister Bunmei Ibuki welcomed the rescue plan, saying it should help to stabilize the US financial markets and thereby help the world economy.

Hong Kong shares soared 4.3 per cent as the Hang Seng Index closed at 20,794.27, up 860 points, in its biggest one-day rise for months.

The surge in prices came as welcome relief after a black week on the Hong Kong stock market, which saw shares tumble below 20,000 last week for the first time in 17 months.

But in China, the key Shanghai Composite Index, which tracks shares traded in foreign and local currencies, lost 59.03 points, or 2.7 per cent, to end the day at a 21-month low of 2,143.42.

Shares surged more than 5 per cent also in South Korea. Seoul's benchmark Kospi index soared 72.27 points, or 5.2 per cent, to close at 1,476.65.

The main index of the technology-heavy Kosdaq market rose 17.47 points to 459.42.

Australian shares leapt 3.8 per cent, the ASX 200 putting on 190 points, or 3.8 per cent, to close at 5,067.

Reserve Bank of Australia Governor Glenn Stevens welcomed the effective nationalization of the two mortgage giants.

"It's a step they had to take, but it's good that they've done it," Stevens said. "The implications strike me as positive at least in the near term."

Taiwan's stocks ended sharply higher with the Weighted Price Index of the Taiwan Stock Exchange closing at 6,658.69, up 351.4 points, or 5.6 per cent.

The Stock Exchange of Thailand index ended at 665.66, up 19.86 points, or 3.07 per cent, despite a deepening political crisis.

Bangkok has been under a state of emergency since September 2 after a pre-dawn clash between pro-government and anti-government groups in the capital that left one person dead and 43 injured.

Meanwhile, India's benchmark Sensex index surged 4.3 per cent, topping 15,000 after the Nuclear Suppliers Group gave approval for opening nuclear trade with India, before shedding some of the gains. (dpa)

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