Wednesday, April 2, 2008

Financials surge on optimism

Securities sales at UBS and Lehman lead to optimism in financials, quelling worries that big write downs will impede their ability to raise capital. This is in stark contrast to the IMF which just lowered its forecast for world economic growth in 2008 citing the worst financial crises in the U.S. since the Great Depression.

Lehman advanced 1.1 percent in German trading today, extending yesterday's 18 percent gain in New York Stock Exchange composite trading. The firm increased the size of its sale to 4 million convertible preferred shares from 3 million and said demand ``significantly'' outpaced supply. Investors paid $1,000 for each Lehman preferred stock, which can convert to 20.0509 common shares once the stock reaches $49.87, or 32 percent higher than the closing price on March 31.
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"The financial shock that originated in the U.S. subprime mortgage market in August 2007 has spread quickly, and in unanticipated ways, to inflict extensive damage on markets and institutions at the core of the financial system,'' the statement said. "The global expansion is losing momentum in the face of what has become the largest financial crisis in the United States since the Great Depression.''
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source: UBS, Lehman Raisings May Signal Rout Is Nearing End

source: IMF Cuts Global Forecast on Worst Crisis Since 1930s

source: Stocks Surge as 2 Major Banks Advance Turnaround Plans

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