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British bank in meeting to “reassure” markets

Published on 21/03/2008

21 March 2008 

London (dpa) – The chief executives of Britain’s major banks are due to meet Bank of England governor Mervyn King Thursday to discuss measures to reassure financial markets.

The meeting, described as a "routine exchange," comes after a volatile day on the London stock market that saw the share price of one leading bank fall by up to 20%Wednesday.

The sharp drop in shares of Halifax Bank of Scotland (HBOS) prompted the central bank Wednesday to deny rumours that HBOS, Britain’s biggest mortgage lender, had requested emergency funding.

A spokesman for the Bank of England said the meeting was a "routine exchange" scheduled last week and was not in response to any specific event.

In an unusual move, the Financial Services Authority (FSA), the watchdog of the City of London, launched an inquiry into "market abuse" Wednesday, accusing "rogue traders" of spreading false rumours and dealing off the back of them.

"We will not tolerate market participants taking advantage of the current market conditions to commit abuse by spreading false rumours and dealing on the back of them," FSA managing director Sally Dewar said in a statement.

Sources said the Bank of England could decide to extend the time limit for a loan of 5 billion pounds (10 billion dollars) it injected into markets Monday.

[Copyright dpa 2008]