- European Rescue Plan Agreed to by Euro Group: European leaders emerged from a Paris meeting Sunday promising a host of measures, including temporarily guaranteeing bank refinancing, in order to combat Europe's growing credit crisis. While a number of the 15 nations currently using the euro will hold simultaneous cabinet meetings on Monday to enact the measures, the rest of the 27-member European Union will reportedly have the opportunity to adopt the measures at a Wednesday meeting. The plan follows similar rescue packages announced last week by the UK, which committed ₤150 billion to help recapitalize banks, and the $700 billion rescue package in the U.S.

- UK Government Announced Additional Measures: On Monday, meanwhile, the UK government announced that it would be taking significant measures to ensure the stability of the country's financial system, as well as rebuild confidence in the banking sector, according to a statement published on its website on Monday.

- G7 Leaders Agree to Financial Crisis Action Plan: The Group of Seven Finance Ministers and central bankers released a joint statement over the weekend, agreeing to a set of principles and saying the current global financial situation "calls for urgent and exceptional action." The principles involve deposit insurance, bank recapitalization, preventing systemic risk and unfreezing credit markets.

- G20 Leaders Support Action Call by G7: In a released statement, the Group of 20 Finance Ministers and central bank governors said they support the action call by the G7 and International Monetary Fund on Saturday to use all tools available to combat the global financial crisis.

- Fed Approves Wells Fargo Takeover of Wachovia: The Federal Reserve approved an $11.7 billion bid for Wachovia from the San Francisco-based bank Wells Fargo on Sunday, removing the last key regulatory hurdle for the deal following backing of the acquisition by federal antitrust regulators on Friday. Citigroup had initially offered to buy the Charlotte, North Carolina-based bank for $2.1 billion in a deal brokered by the Federal Deposit Insurance Corp. Days later, the board of Wells Fargo agreed to an all-stock offer worth $11.7 billion.

- Further Co-ordinated Central Bank Action Announced: A number of central banks around the world announced on Monday further measures to alleviate pressure on short-term money markets. According to the release, the European Central Bank, the Bank of England and the Swiss National Bank will conduct 7-day, 28-day and 84-day refi tender operations at fixed rates, set in advance of each operation, while the counterparties would be allowed to borrow any amount needed, secured against appropriate collateral. Meanwhile, the Bank of Japan said it will consider introducing similar measures to its financial markets.

- Bini Smaghi Says ECB Won't be Substitute for Private Banks: ECB Executive Board member Lorenzo Bini Smaghi said in a webcast interview with Italy's la Repubblica on Monday that the European Central Bank will not be a substitute for private banks and take over commercial loans to firms. Regarding the announcement made on Oct. 12 that European governments will do what is needed to assist troubled lenders with bailout guarantees for lenders in their respective countries, the ECB member said he believes that a single EU fund would have been a better solution.

- Stark Says Central Bank Rate Cust a Signal for Markets: ECB Executive Board member Jürgen Stark said the central banks' co-ordinated rate cuts announced last week should be interpreted more as a "signal to markets" rather than as an "aid in the short term". In an interview published in German newspaper Frankfurter Allgemeine, Stark also said that the ECB was able to reduce its main refinancing rate by 50 basis points to 3.75% only because of moderating inflationary pressures and falling inflation expectations.

- Wellink Says Dutch Government Won't Allow Banks to Fail: ECB Governing Council member Nout Wellink, also the President of the Nederlandsche Bank, told Dutch newsagency Geassocieerde Pers Diensten on Sunday that the Dutch government will not allow financial institutions to collapse. Wellink's statement follows the Dutch government's announcement on Oct. 9 that €20 billion would be set aside for "fundamentally sound and viable'' firms in an effort to increase liquidity levels and solidify the financial sector against a deteriorating credit environment.

- IMF in Talks to Assist Hungary: Recognizing the ongoing stress that Hungary is facing due to the financial turmoil, International Monetary Fund Managing Director Dominique Strauss-Kahn announced that the IMF is in close talks with both the Hungarian authorities and the EU regarding possible technical and financial support for the country.

- Sentence Says UK Inflation Could Peak Above 5%: Bank of England Monetary Policy Committee member Andrew Sentence, speaking at a Market New International conference in London, said that inflation could peak at above 5.0% for some time before possibly falling below the central bank's target level of 2.0%.

- UK Producer Prices Rise Annual 24.5% in September: UK input producer prices rose 24.5% in the 12 months to September, down from the previous period's 28.8% gain, but up from the 19.8% rate expected, according to a press release from the Office for National Statistics. Meanwhile, July's increase was revised up from an initial estimate of 26.0%. In monthly terms, the input PPI contracted 1.2% in September following July's 2.0% decline. Economists had anticipated a fall in producer prices and had forecast a 1.5% fall for the month.

- French Current Account Deficit Widens: The French current account deficit widened to €4.2 billion in August, up from both the €4.0 billion level expected and the €3.6 billion deficit figure seen in the previous month, which revised down from an initially reported €3.8 billion.

- Aussie Job Advertisements Trends Downward: Continuing a downward trend, job advertisements in major metropolitan newspapers and on the internet in Australia declined by 1.4% in September, following the 4.3% fall August. This amounts to a weekly average of 245,734 ads per week, according to ANZ Economics and Markets Research.

- NZ Retail Sales Falls in August: Retail sales in New Zealand reversed the previous month's decline by rising 0.4% in August, more than the 0.3% expected by some economists, Statistics New Zealand reported. In July, the decline in sales was revised to -0.7%, up slightly from the 0.8% decrease initially reported. Retail sales excluding autos rose by 0.8%, despite expectations for a 1.2% increase and follows July's flat reading, which was initially reported as a 0.2% decline.

-RBA Announces Cash Injection, Bank Guarantees: In a continued effort to ease funding pressure from the current global credit crisis, the Reserve Bank of Australia announced an A$2.849 billion cash injection in one of its daily operations. The injection comes one day after the Australia announced it would guarantee all bank deposits in the country.

-Norway Announces Issuance of Government Bonds: The government of Norway on Sunday announced plans to shore up bank liquidity, including the issue of up to 350 billion crowns ($57 billion) in government bonds. The bonds will be made available to the banks for periods of up to three years against collateral, the government explained in a release. It also said banks may surrender covered bonds, including bonds issued by a mortgage association within the bank group, and that the facility will be made available against a market based premium.

IN THE MARKETS:

Data Taken at 7:27 a.m. EDT:

The euro was up 1.72 cents to 1.3580 USD.

The U.S. dollar was down 0.39 cents to 1.1693 Canadian Dollars.

The U.S. dollar was down 31.50 cents to 100.37 Yen.

The pound sterling was up 2.04 cents to 1.7246 USD.

The Australian dollar was up 2.63 cents to 0.6696 USD.

The U.S. dollar index was down 144.40 points to 81.55.

The U.S. ten-year note was down 60.9 ticks to 112.94 with yields down 0.0 bps to 3.87%.

The German ten-year bund was down 73.0 ticks to 114.65 with yields up 4.4 bps to 4.04%.

The British ten-year gilt was down 131.0 ticks to 110.54 with yields up 15.0 bps to 4.62%.

The Australian ten-year bond was down 1.5 ticks to 94.43 with yields up 40.8 bps to 5.55%.

The Japanese ten-year government bond was up 3.0 ticks to 137.38 with yields up 0.1 bps to 1.53%.

The Eurostoxx was trading up 114.55 points to 2209.05.

The FTSE 100 was trading up 148.68 points to 4080.74.

The Dax was trading up 294.18 points to 4838.49.

The Nikkei closed down 881.06 points to 8276.43.

The Australian ASX closed up 220.00 points to 4180.70.

The Hang Seng closed up 1515.29 points to 16312.16.

The Shanghai Composite closed up 73.00 points to 2073.57.

Dow Jones Futures were up 351.00 points to 8721.00.

S&P 500 Futures were up 43.00 points to 934.00.

WTI Crude oil is up $3.44 to $81.14 per barrel.

S&P 500 Futures were down 21.75 points to 890.75.

WTI Crude oil is down $3.96 to $82.63 per barrel.

ECONOMIC DATA:

Sunday

7:01 NZ Quotable Value House Prices (Y/Y) September -5.8% vs. Prior: -4.5%

17:45 NZ Retail Sales (M/M) August +0.4% vs. Prior: -0.8% Rev: -0.7%

17:45 NZ Retail Sales Ex-Auto (M/M) August +0.8% vs. Prior: -0.2% Rev: 0.0%

20:30 AU ANZ Job Advertisements (M/M) September -1.4% vs. Prior:-4.9%

Monday

2:45 FR Current Account August -4.2% vs. Exp: €-4.0B Prior: €-3.8B Rev: -€-3.6B

4:30 GB PPI Input (Y/Y) (NSA) September +24.5% vs. Exp: +19.8% Prior: +26.0% Rev: +28.8%

4:30 GB PPI Output (M/M) (NSA) September -0.3% vs. Exp: -0.4% Prior: -0.6% Rev: -0.7%

4:30 GB PPI Output (Y/Y) (NSA) September +8.5% vs. Exp: 8.8% Prior: 9.7% Rev: +9.1%

4:30 GB PPI Output Core (Y/Y) (NSA) September +5.4% vs. Exp: +6.0% Prior: +6.4% Rev: +5.6%

By Ryan Szporer, This email address is being protected from spam bots, you need Javascript enabled to view it , with contributions from Todd Wailoo, This email address is being protected from spam bots, you need Javascript enabled to view it , Stephen Huebl, This email address is being protected from spam bots, you need Javascript enabled to view it and Adam Button, This email address is being protected from spam bots, you need Javascript enabled to view it

CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca

The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.

A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.