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17/09/08

AIG rescued by Fed, Barclays buys Lehman U.S. unit

NEW YORK (Reuters) - Capping an extraordinary day in financial markets, U.S. authorities pieced together an emergency $85 billion rescue of insurance company American International Group Inc to stave off a bankruptcy that could have thrown world markets into deeper turmoil. AIG's rescue calls for the U.S. Federal Reserve to lend up to $85 billion to AIG for two years in exchange for a 79.9 percent equity stake. It comes just two days after U.S. authorities refused to bail out investment bank Lehman Brothers Holdings Inc , forcing it into bankruptcy court despite pleas from Wall Street's chiefs.

Fed holds rates steady, spurning calls for cuts

WASHINGTON (Reuters) - The Federal Reserve held U.S. interest rates steady on Tuesday and showed little inclination to lower them soon, spurning calls for cuts from financial markets roiled by the bankruptcy of investment bank Lehman Brothers Holdings Inc . The central bank's unanimous decision left benchmark overnight rates at 2 percent, a level reached in April.

Canada maintains growth outlook despite turmoil

OTTAWA (Reuters) - Canadian Finance Minister Jim Flaherty sees no need to lower his forecast for the country's economic growth, despite a deepening global financial crisis and his expectation of a further slide in U.S. growth. Flaherty said in an interview with Reuters he was open to the idea of concerted action among policy makers in the world's most developed economies to manage the fallout from the failure of some of Wall Street's biggest firms.

Goldman, Morgan Stanley profits fall amid slump

NEW YORK (Reuters) - The two largest U.S. investment banks, Goldman Sachs Group Inc and Morgan Stanley , reported lower quarterly profits, but beat expectations on Tuesday even as the worst market slump in decades rattled Wall Street. Goldman Sachs, the largest securities firm, said third quarter earnings fell 70 percent on weaker-than-expected revenues, knocking its shares to nearly three-year lows.

Manulife seen eyeing AIG assets in U.S. upheaval

TORONTO (Reuters) - Canadian life insurance company Manulife Financial Corp could be well placed to pick off some business lines from American International Group if the troubled U.S. insurer has to sell them. Analysts say Manulife, the biggest life insurer in North America by market value, would at least consider acquiring AIG's U.S. variable annuity business, and Manulife executives have said they would like to enter the Japanese and Chinese wealth-management markets.

Teck, Fording confident in takeover proceeding

TORONTO (Reuters) - Teck Cominco moved to quell concerns about its $13.7 billion takeover of Fording Canadian Coal Trust on Tuesday, saying it believed financing for the deal was solid and that it had options if one of its lenders withdrew. "We are working hard to complete the financing by September 30, and we look forward to closing the deal," Teck Chief Executive Don Lindsay said on a webcast to address investors who have grown jittery about the $9.8 billion Teck is borrowing to finance the deal.

C.banks dish out emergency cash despite AIG rescue

SINGAPORE/TOKYO (Reuters) - Japan and Australia pumped more emergency funds into money markets on Wednesday, as a U.S. government bailout of insurer AIG did little to ease a funding squeeze triggered by the crisis engulfing Wall Street. Overnight dollar funds were quoted at 7.5 percent in Asia, compared with the Federal Reserve's 2 percent target rate. Traders in Singapore said dollar funds were costing as much as 8.5 percent, down from 10 percent late on Tuesday.

St Lawrence Seaway says union has strike mandate

OTTAWA (Reuters) - The company that runs the St Lawrence Seaway, the giant waterway that links the Great Lakes with the Atlantic Ocean, said on Tuesday its 445 unionized workers had voted in favor of giving their union a strike mandate but added it hoped to avoid a stoppage. The St. Lawrence Seaway Management Corp said it "continues to be confident" it can reach a new collective agreement with the Canadian Auto Workers union when talks start up again on October 6.

Toronto stocks end lower, rebound from early plunge

TORONTO (Reuters) - The Toronto Stock Exchange's main index rebounded late Tuesday to end down slightly, after sliding to its lowest level in almost two years, as investors fretted over the fate of U.S. insurer American International Group and the price of oil fell to a seven-month low. In a volatile session that threatened to build on Monday's 4 percent plunge, the S&P/TSX composite index briefly dove into bear market territory, before staging a rebound on the back of strengthening resources.

Canada dollar slips on soft commodities, bonds fall

TORONTO (Reuters) - The Canadian dollar fell against the U.S. dollar on Tuesday due to soft commodity prices, but managed to make up some ground late in the session as markets cheered a report of a possible bailout for troubled insurer American International Group . Canadian bond prices tumbled lower along with the larger U.S. market after the U.S. Federal Reserve held interest rates steady, and the AIG report surfaced.

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