AIG Tumbles, Worsening Financial Carnage - Financial Crisis: Brits Step In
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BRITS STEP IN
Barclays -- which quit frantic talks over the weekend to rescue
Lehman after U.S. authorities failed to guarantee trading obligations
-- is now looking to buy Lehman's U.S. broker-dealer business,
including equity, fixed income, M&A advisory and other parts, the
sources said.
The talks mainly involve the core U.S. business, with 8,000 to
10,000 staff, but could include some of its global businesses, the
sources said, and a deal could save thousands of jobs and many of the
core investment bank operations.
There is an urgency to the talks, as a deal would need to be struck
before staff and clients leave and damage the franchise, the sources
said.
Top U.S. savings and loan Washington Mutual saw its rating cut to
"junk" status by Standard & Poor's on Monday amid concerns about
mortgage losses. Its shares slid in after-hours trading after a 27
percent drop in the regular session.
MARKETS TUMBLE
European credit spreads widened sharply early on Tuesday, surpassing last session's high, after AIG's downgrade.
"The second leg of the subprime crisis has begun," Jun Kwang-woo,
head of South Korea's Financial Services Commission, told reporters.
"It could be painful, but a recovery, once in place, may be rapid."
Asian stocks tumbled across the board, with Tokyo down more than 5 percent at a three-year low.
Japanese government bond futures jumped by their daily limit of
three full points as investors fled to safe havens, while Japan's
central bank said it would strive to maintain stability in financial
markets.
(Additional reporting by Steve Slater, Maya Thatcher, Lilla Zuill,
Umesh Desai, Michael Flaherty, Kevin Plumberg, Tom Miles, Steve Johnson
and Jon Stempel; Editing by Sue Thomas and John Wallace)
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