Financial Update

World stock markets soar Markets around the world sprung to life as nations expanded their efforts to save the world’s financial system. On Monday 5 central banks - including the U.S.

Federal Reserve and the European Central Bank - unveiled new measures to thaw frozen credit markets and bolster funding to banks. The Bank of England, the European Central Bank and the Swiss National Bank said they would provide unlimited U.S. dollar funds to financial institutions. The Bank of Japan said it was considering similar measures.

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· TSX -535.02pts Friday Last week, the TSX lost more than 16% of its value, one of the worst weeks ever for the Canadian market, on investor worries about falling commodity prices and a spreading economic recession. When trading resumes Tuesday, the Toronto market is expected to post major gains following the Wall Street jump.
· Dow -128pts Friday +936.42 pts Monday- storming back from last week's devastating losses, after major governments' plans to support the global banking system reassured distraught investors. by far outstripping its previous record one-day point gain, 499.19, set during the waning days of the dot-com boom..
· Dollar -2.59c to $87.28US. Friday
· Oil +3.49to $81.19US per barrel rebounding from a 13 mth low
· Gold -16.50 to $838.90US per ounce Gold rose in Europe on Monday as the US dollar weakened, boosting the precious metal's appeal as an alternative investment, and as oil prices climbed.

EU announces $2.3 trillion US bailout plan
Angela Charlton and Emma Vandore The Associated Press PARIS
European governments overcame their differences to put $2.3 trillion US on the line yesterday in guarantees and other emergency measures to save the banking system in their most unified response yet to the global financial crisis.

The pledges by six countries that use the euro and Britain helped soothe stock markets, along with a promise by top central banks to provide unlimited short term dollar credits.

The amount -- pledged by Germany, Britain, France, the Netherlands, Spain, Portugal and Austria -- dwarfs the $700 billion rescue package put together by U.S. President George W.
Bush's administration, although not all the European money will necessarily be spent.

It represented Europe's most unified response yet to the financial crisis, after weeks where European governments often acted at cross purposes and sniped at each other -- a piecemeal approach that failed to stop steep and frightening slides on financial markets.

"The time of each one for itself is fortunately over," French President Nicolas Sarkozy said, following a cabinet meeting that approved France's spending in the framework of the scheme.
"United Europe has pledged more than the United States," added the French leader, who has taken a lead in corralling European governments to act together.

The money pledged by European governments will not go into a collective pot. Instead, governments were deciding individually how much to commit to supporting their own banks under broad guidelines agreed at a summit on Sunday.

The sums are considered a maximum, and might not all be spent if the financial crisis eases.
About $341 billion of the European pledges was earmarked to be spent on recapitalizing banks by buying stakes.

The money pledges put a price tag on the package agreed to Sunday by the 15 countries that use the euro currency. They agreed to individually guarantee bank refinancing until the end of next year, rescue important failing banks through emergency cash injections and take other swift measures to encourage banks to lend to each other again.

Stocks markets rebounded yesterday after the European decision and other weekend efforts to find solutions to the financial crisis, which has crushed major banks in both the U.S. and Europe and battered stock exchanges worldwide.

Germany's DAX rose 518.14 points, or 11.4 per cent, to close at 5,062.45, while France's CAC-40 was up 355.01 points, or 11.2 per cent, at 3,531.50. Britain's FTSE 100 was 324.84 points, or 8.3 per cent, higher at 4,256.90, despite some hefty falls in the banks that have accepted government help.

Also helping markets was a joint move by the U.S. Federal Reserve, the European Central Bank and the Swiss National Bank to provide unlimited short-term credit in U.S. dollars to financial institutions. The Bank of Japan said it was considering similar measures.

Europe's biggest economy, Germany, put together a rescue package worth as much as $671 billion to shore up the country's financial system.

Sarkozy said the French government would provide up to $491 billion to help banks, most of that in guarantees for bank refinancing. The Netherlands put up $273 billion to guarantee interbank loans.

Austria's government offered up to $116 billion. Spain said it would guarantee up to $135 billion in a bank bond issuance this year. Portugal guaranteed $27 billion -- nearly 12 per cent of annual GDP -- to encourage Portuguese banks to lend to each other.

Italy did not earmark a specific amount but Finance Minister Giulio Tremonti told reporters the government would offer "as much as necessary."

The European moves are modelled on Britain's $88-billion plan to partly nationalize major banks. Prime Minister Gordon Brown has also promised to guarantee a further $438 billion worth of interbank loans to restore confidence in the financial sector.

The head of the International Monetary Fund welcomed the European decision despite the high price it is expected to impose on state budgets.

The Associated Press