UK launches huge bank bailout

The government hopes the measures will overcome the reluctance of banks to lend to each other, which is at the root of the current crisis. The Bank of England also announced it was cutting its key lending rate by half a point to 4.50 per cent. Neither measure prevented fresh falls on the London stock market with the FTSE 100 index of top shares down 5.18 per cent at the close.

Unveiling the bank rescue package, prime minister Gordon Brown said 8220;extraordinary times call for bold and far-reaching solutions. The global financial market has ceased to function, putting in danger the necessary flow of money to businesses and families,8221; he said.

Chancellor of the Exchequer Alistair Darling said the bailout 8220;will go a long way8221; to stabilising banks but indicated he was prepared to take further action, saying he still did not 8220;rule anything out8221;.