Central banks pump £100bn into markets

Central banks pumped £100bn into world markets last week to ease the suffering of financial institutions in the UK and around the world.

The collaborative effort to tackle the liquidity crisis saw the US Federal Reserve loan dollar funds to the Bank of England, the European Central Bank, the Bank of Japan, the Bank of Canada and the Swiss National Bank.

The move to get the liquidity markets flowing again came too late for HBOS, which at one stage saw its shares plummet by 50% to lows of 88p per share.

Short selling – thought to be a contributing factor in the HBOS share downfall – was banned by the Financial Services Authority on Friday.

Following Lloyds TSB’s takeover of HBOS, shares rallied and the FTSE 100 saw the sharpest one-day rise in its 24-year history. HBOS shares jumped to 263p and Lloyds TSB’s price rose from 233p to 393p.