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Citi rescue plan boosts world shares, oil
November 24, 2008 / 3:13 AM / 9 years ago

Citi rescue plan boosts world shares, oil

<p>A man looks at monitors displaying stock prices inside a securities company in Taipei in this October 24, 2008 file photo. REUTERS/Nicky Loh</p>

LONDON (Reuters) - World stocks rebounded on Monday from last week’s 5-1/2 year low and oil also rallied after the U.S. government unveiled a $300 billion-plus rescue package for banking giant Citigroup (C.N).

Washington’s plan -- its biggest rescue of a bank yet -- could become a model for other U.S. banks expected to face growing losses from the credit crisis which began in 2007.

But the plan failed to erase worries about the impact of deteriorating major economies on corporate profits and consumer consumption, supporting the low-yielding yen.

Monday’s closely-watched IFO survey offered the latest evidence of gloomy economic conditions, with the German business climate index falling to 85.8, its lowest since February 1993. “The Citigroup plan is a good thing in the sense that it’s good for financial stability,” said Chris Gothard, currency analyst at Brown Brothers Harriman.

“But concerns still remain about the state of the global economy and the state of the financial system worldwide.”

MSCI world equity index .MIWD00000PUS was up 1.4 percent, having hit a 5-1/2 year low on Friday. Emerging stocks .MSCIEF rose 0.4 percent. U.S. stock futures rose almost 3 percent, pointing to a firmer start on Wall Street.

Citi’s shares rose nearly 40 percent in Frankfurt TRV.F.

U.S. crude oil reversed early losses to rise 3.5 percent to $51.71 a barrel.

The IFO survey showed that German corporate sentiment fell by much more than expected in November to its lowest level since February 1993 as firms grew gloomier about the business outlook.

The yen rose 0.2 percent to 95.75 per dollar, trimming early gains. The dollar .DXY fell 0.7 percent against a basket of major currencies.

“Once again, the market is faced with a weekend hangover where it has to decide whether it should feel relief that something has been done, or renewed unease that something had to be done in the first place,” Calyon said in a note to clients.

The December bund future fell 20 ticks.

Additional reporting by Naomi Tajitsu; Editing by Ron Askew

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