World stocks rocket as state step up rescue with a tax and inflation-payer bailout

LONDON, September 19, 2008 (AFP) – Global equity markets soared on Friday, lifted by mammoth share price gains for banks, as governments worldwide stepped up their fight against the worst financial crisis in decades, traders said.

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The US government said it was putting together a rescue plan to clear away the mountains of bad debt that have weighed down banks in the past year.

In another move, the US financial watchdog, the Securities and Exchange Commission, banned the short selling of shares — a process whereby investors trade in borrowed stock and which has been widely blamed for the recent market turmoil.

The European Central Bank and Bank of England meanwhile on Friday each offered to lend an additional 40 billion dollars (28 billion euros) to financial institutions struggling to obtain funds amid a worldwide squeeze on credit.

In European midday trading Friday, London surged 8.03 percent, Paris won 7.11 percent and Frankfurt rallied by 4.72 percent.

British bank HBOS, which was rescued by peer Lloyds TSB in a multi-billion dollar takeover Thursday, saw its share price spike 39 p