The freeze in global credit markets deepened on Monday even as European stock investors remained hopeful that the U.S. Congress would pass a revised financial bailout package.
The LIBOR rate on overnight loans between banks surged to an all-time high of 6.88%, up from 2.57% the day before, as banks have virtually stopped lending to each other.
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Meanwhile the selloff in European bourses was surprisingly mild. In midafternoon trade, Germany's DAX and France's CAC 40 were less than 1% in the red while the benchmark indexes in London and Zurich, the FTSE 100 and SMI, respectively, were showing a recovery, even if slight. Trading in Russian markets was halted for the second time in as many weeks after a run on shares. As oil prices have dropped on fears of a global recession, the petro giant looks increasingly vulnerable. - Barbara Rudolph
