European shares finished up over 3% on Monday with investors’ confidence boosted by the US government’s takeover of troubled mortgage financiers Fannie Mae and Freddie Mac.
London based financial veteran David Buik said that shows recognition of the problem and it could help stabilise things for a while: “Had that not happened, and one of them or both of them had gone down then I think it’s fair to say that the US economy would have fallen into a vortex of despair and depression and recession for at least five years, and the ramifications for the rest of the world are not worth thinking about.”
Financial stocks were big gainers, including Swiss bank UBS, which was the worst hit in Europe by subprime-related losses.
Deutsche Bank, BNP Paribas, Credit Agricole, Anglo Irish and Allied Irish also surged along with
French insurer AXA.
Mining and energy stocks advanced,supported by a rise in commodity prices and the dollar is strong.
In London a computer fault left some traders unable to buy or sell shares for more than six hours.