INSTANT VIEW: U.S. bails out insurer AIG with $85 bln loan

NEW YORK (Reuters) - The U.S. government agreed to rescue insurer American International Group with an $85 billion loan from the New York Federal Reserve to stave off a bankruptcy that would have thrown world markets back into turmoil.

KEY POINTS:

* The U.S. Federal Reserve will extend AIG $85 billion in exchange for a nearly 80 percent stake to bail it out, the Fed said in a statement.

* The deal averts the largest corporate bankruptcy ever.

COMMENTS:

LIM TAE-GEUN, MARKET ANALYST, DAEWOO SECURITIES, SEOUL

"Shares are recouping yesterday's massive losses and it also helped that the U.S. government is seen providing lifeline to AIG.

"Eyes are on U.S. financial markets as investors continue to be concerned about its ripple effects to the real economy and higher risk premium on emerging markets. Stocks are cheap, but investors are waiting for the signs of some sort of stability on Wall Street."

CALLUM HENDERSON, CHIEF CURRENCY STRATEGIST AT STANDARD CHARTERED BANK, SINGAPORE:

"Markets are trying to find a floor given the latest events and headlines out of the US, which may help to support sentiment if they accurate.

"Asian equity markets are generally higher on the back of the slightly stronger close to the Dow. In line with this, many Asian currencies have come off their lows.

"The bigger question is whether or not this will change the economic outlook for Asia - and the answer to that is clearly no. So any rally in Asian currencies is going to be temporary and the more important level is going to be at what level do you sell them?"

KOICHI HAJI, CHIEF ECONOMIST, NLI RESEARCH INSTITUTE

"Rescuing AIG itself is a good thing, but we're seeing a double-standard here. Why is the Fed helping AIG but not Lehman? Unless U.S. authorities come up with a clear standard on who to help and who not to, market unrest will continue.

"Investors are becoming very risk-averse. They don't want to get into trouble. We'll likely see market turbulence for some time. Japanese investors will continue repatriating money from abroad.

"The biggest worry for Japan's economy is a possible surge in the yen, or a sharp dollar decline. If confidence in the dollar erodes, we might see the dollar plunge and once that happens, it's hard to control it. A joint currency intervention by the United States, Japan and euro zone to stem dollar falls then becomes a possibility."