Markets climbed worldwide after Bank of America invested $2 billion in Countrywide, giving the mortgage lender a desperately needed injection of cash and proving some appetite is left as subprime mortgages continue to rot. Barclays in the U.K., Mitsubishi in Japan, and Countrywide itself in Europe all saw major gains. "It's a significant vote of confidence," says an Edinburgh trader.
Euro Stoxx and Asian benchmarks all rallied; the Dow shot up in early trading before retreating to its starting point around 10 AM. "This $2 billion deal is very significant and bolsters Countrywide's financial position and reduces the possibility of the subprime problem extending into the wider economy," says a London stock manager.