Stocks plunge despite Credit Suisse buyout, central banks' pledge

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HONG KONG, March 20 — Equities sank today on fears about the financial sector, despite news of UBS's takeover of embattled Credit Suisse and central bank pledges to provide...

HONG KONG, March 20 — Equities sank today on fears about the financial sector, despite news of UBS's takeover of embattled Credit Suisse and central bank pledges to provide liquidity to troubled lenders.

Other regional bank shares were also hit, including Japan's Mitsubishi UFJ Financial, National Australia Bank and India's ICICI. Shanghai rose after the Chinese central bank cut the amount of cash banks must keep in reserve, hoping to boost the country's economy.The collapse this month of regional lenders Silicon Valley Bank, Signature Bank and Silvergate sparked fears of contagion as worried customers withdrew cash.

Yesterday UBS — Switzerland's biggest bank — said it would buy Credit Suisse for US$3.25 billion following crunch talks in hopes of stopping a wider international banking crisis.Meanwhile, the Fed and the central banks of Canada, Britain, Japan, the European Union and Switzerland said they would launch a coordinated effort today to improve banks' access to liquidity.

Some observers expect at least one more increase but possibly a hold afterwards, while there is a growing belief that cuts could be announced before the end of the year, despite prices still rising faster than the Fed would like.

 

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