INSTANT VIEW: JP Morgan to buy Bear as Fed cuts discount rate

NEW YORK (Reuters) - JPMorgan Chase & Co said on Sunday it would buy stricken rival Bear Stearns for just $2 a share in an all-stock deal valuing the fifth largest investment bank at about $236 million.

In a surprise move to stem the fast-spreading debt crisis, the U.S. Federal Reserve also lowered the discount rate it charges on direct loans to banks to 3.25 percent, effective immediately, and announced a new lending program under through it which will lend to other big financial firms.

U.S. stock index futures gained on initial news of the Fed moves but then fell sharply on Sunday evening as investors worried that fallout from a global credit crunch will continue to spread, damaging more banks and undermining the financial system.

Asian stocks also fell while the dollar sank to a record low against the euro and a fresh 12-year low against the yen. Treasuries climbed and Gold hit a record high as the Fed move failed to calm panicky investors.

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GREG ORRELL, PORTFOLIO MANAGER OF THE $165 MILLION OCM GOLD

FUND IN LIVERMORE, CALIFORNIA, ON RATE CUT:

"You don't fight the inflationary implications. That's not the battle of the day. You'll worry about that later ... The battle of the moment is trying to maintain the financial system and not having a complete break down. That's where we're at. You're having a run on confidence."

"We really don't have enough transparency in the financial system to have confidence ... We still have no understanding of how structured debt products and their derivatives will play out."

"Gold is still going to find broader participation ... It is certainly going to find some strength through the week."

MARK PERVAN, SENIOR COMMODITIES ANALYST, ANZ:

"The Bear Stearns announcement highlights the risks facing the banking sector as the reporting season gets going. I think a lot of investors are parking money in gold.

"Investors will want to move their money as far from the United States as possible and Australian and Asia resource stocks might be a good play."

Earlier comments:

EMANUEL WEINTRAUB, MANAGING DIRECTOR OF INTEGRE ADVISORS IN

NEW YORK: