FTSE retreats, money markets still frozen

By MoneyhighStreet Staff. Published on October 9, 2008 This post currently has no comments.

London Stock Exchange 1
The FTSE 100 retreated slightly today, with gains wiped out by the opening of the US exchanges this afternoon.

With the markets digesting the government''s multi-billion bank recapitalisation plan, as well as the concerted round of 0.5 per cent bank rate cuts yesterday, the index soared to over 4500 at one point.

This followed the FTSE''s drop of over five per cent on Wednesday, as fears of recession and general uncertainty spread.

Money markets remain frozen, however with the Bank of England''s three-month lending rate of particular concern at almost two per cent above the base rate.

Speaking to the Press Association, Investec economist Philip Shaw termed the rate "disappointingly high".

Moreover in the US, the Dow Jones is currently trading down by over 100 points, after rising around 200 points on opening.

The lifting of financial regulator the Securities and Exchange Commission''s temporary short-selling ban is likely to be a factor in these falls.

The FTSE closed at 4316.35, down 50 points or 1.2 per cent.