Iseq up as US takes control of Fannie and Freddie

Shares on Dublin’s Iseq surged this morning after the US government seized control of major US mortgage firms Fannie Mae and Freddie Mac.

At 8.50am the Iseq was up almost 7 per cent at 4,580 a rise of 298 points.

Banks were the biggest gainers with Anglo Irish Bank adding 14.6 per cent to €6; AIB up 13 per cent to €8.91 and Bank of Ireland gaining 11.7 per cent to €5.90. Irish Life and Permanent stock added 11.4 per cent to €7.20.

Building related stocks received a boost from the news with CRH rising to €18.75, a gain of 9 per cent, while Grafton added 8.5 per cent to €3.80.

European shares were also higher this morning with the FTSEurofirst 300 up 3.6 per cent at 1,165.7 at 8.20am.
France's CAC-40, Germany's DAX and the FTSE notched up gains of between between 3.1 and 4.2 per cent.

"It will be big for the banks. Mortgage rates should come down, and this should give some stability to the market," said a Paris-based strategist.

"There will be a big one-day pop. But it's really only reclaiming what was lost last week. It's not a big break in the trend, which is still downwards," he added.

The US government yesterday seized control of mortgage finance companies Fannie Mae
and Freddie Mac, launching what could be its biggest bailout ever to support the US housing market and ward off more global financial market turbulence.

The takeover plan makes it more explicit that debt issued by Fannie and Freddie will be backed by the US government and curbed worries about possible losses among financial institutions and investors that hold such paper, analysts said.