The rescue team stabilised the patient before initiating the evacuation process
Shares fell on deepening fears that top financial institutions would not survive the worsening economic crisis and job losses mounted.
Belgium is planning a second round of financing for banks and France and Germany also offered more help, but the prospect that more dramatic intervention will be needed as economies tip into recession tugged the European banks index to a 16-year low.
British banks led the fall, with Barclays crashing 20 percent to 58 pence and Lloyds Banking Group down 15 percent at 38p on worries they and RBS could need more state help or be fully nationalised.
The bank bailouts dealt a major blow to Britain’s public finances as the recapitalisation of ailing Royal Bank of Scotland blew out the deficit to its highest on record in December.
The data dealt a blow to sterling which hit a 7-1/2 year-low against the dollar on the view the ailing UK financial sector would keep the economy weak despite bank bailouts, fiscal stimulus and interest rate cuts.
The Office for National Statistics said the public sector posted a net cash requirement of 44.2 billion pounds ($62 billion) last month, its highest on record. Almost half was due to the government’s recapitalisation of RBS.
“There are a lot of jitters in the financial markets, and it’s taking its toll on currencies which have stressed capital financing needs and which are particularly exposed to financial sector weakness,” said Phyllis Papadavid, currency strategist at Societe Generale in London.
Britain launched a second bank rescue plan on Monday.
In more evidence that economies are not responding government measures, Germany said its economy would contract by 2.25 percent this year, sinking into its deepest recession since World War Two.
Fourth-quarter GDP data on Friday are expected to confirm Britain is in recession for the first time since 1992.
Redundancies gathered pace as banks pull credit lines, forcing companies to take harsh cost-saving measures.
The number of Britons out of work is approaching two million, and the world’s largest miner, BHP Billiton Ltd/Plc, said it would cut 6 percent of its work force as it battles a collapse in commodity prices.
BHP’s announcement added to the dim outlook for metals and helped push copper and aluminium prices down around 2 percent on Wednesday.
Copper, used in power and construction and a gauge of economic activity, has fallen more than 60 percent since record highs last July as the financial crisis hurts demand.
Global oil demand is also seen contracting, more sharply than previously expected, by 430,000 barrels per day in 2009 to 85.43 million bpd, according to a Reuters poll. This is a significant shift from a Reuters poll in November.
The International Monetary Fund warned it would sharply cut growth forecasts this month and the world would not return to strong growth for two or three years.
“Things are not improving,” IMF Managing Director Dominique Strauss-Kahn said in an interview with the BBC. The IMF’s last forecast was “not that good” and a new forecast, to be released in a few days, would be “even worse”, he said.
In a bid to soften the blow of the financial crisis on its lenders and borrowers, the Australian government said it would help businesses starved for credit and extend a ban on short selling of financial stocks.
Bank of England Governor Mervyn King late on Tuesday said the central bank was considering buying high quality assets such as corporate bonds and commercial paper to free up capital and boost lending to ease the credit crunch.
On a more positive note, German Economy Minister Michael Glos said he expected economies to improve by 2010 and European Central Bank President Jean-Claude Trichet played down the threat of deflation.
“There is presently no threat of deflation,” Trichet told a committee of the European Parliament.
“We are currently witnessing a process of disinflation, driven in particular by a sharp decline in commodity prices....It is a welcome development.”
The rescue team stabilised the patient before initiating the evacuation process
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