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BREAKING NEWS

In an effort to ward off a global credit crisis, the US Federal Reserve and the European Central Bank have pumped tens of billions of euros into the banking system.

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In an effort to ward off a global credit crisis, the US Federal Reserve and the European Central Bank have pumped tens of billions of euros into the banking system.

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The Fed provided 35 billion dollars on Friday. After the opening bell, Wall Street was trading 1.4 percentage points lower. Tracking US stocks, European shares extended their losses. The pan-European Footsie was down almost 3 percent. Asociate director of Montsegur Finance, Francois Chaulet: “One week ago banks and insurers released excellent results for the first quarter of 2007 on the financial results of their activities, with progressions and even surprises that surpassed the expectations of analysts. But if they have not been damaged either in their results or in their own funds, there are certainly indications that some of their clients have been damaged.” There is fear cheap credit that has fuelled global growth could be at risk.

Henk Potts, equity strategist at “Barclay’s Wealth”, applauds the intervention by the European central Bank and the US Fed: “What a big turnaround when you read the headlines, the coordinated approach to inject billions of dollars worth of liquidity into the global banking system, therefore they are suggesting we are on the verge of a credit crunch. This is a pre-emptive strike from central banks to try to avert that.”

Despite the massive measures by the Fed, markets fell sharply again just one day after markets in the United States and Europe suffered heavy losses amid fears of a global credit crunch. Billions of euros have been wiped off share values adversely affecting businesses as well as individual investors.