Financial News

LONDON (ShareCast) - Equity investors are performing their own bail-out today, jettisoning banking shares with the notable exception of Citigroup (ASFZ.PK - news) , which has participated in the rescue of regional bank Wachovia (AWO - news) .

The US banking giant is to buy the banking operations of North Carolina-based bank Wachovia in a deal brokered by the Federal Deposit Insurance Corporation.

The Federal Deposit Insurance Corporation (FDIC) stressed that Wachovia "did not fail; rather, it is to be acquired by Citigroup Inc. on an open bank basis with assistance from the FDIC."

Under the terms of the takeover, Citigroup will take on up to $42bn of losses on a $312bn pool of loans with the FDIC absorbing any losses beyond that.

In return for bearing the risk of the excess losses the FDIC has been granted $12bn in preferred stock and warrants of Citigroup.

The move echoes the Banco Santander (SANB3.SA - news) and UK government rescue of British buy-to-let mortgage lender Bradford & Bingley (LSE: BB.L - news) , and the move by the governments of Belgium, Luxembourg and the Netherlands to inject €11.2bn into Fortis (Amsterdam: FOO.AS - news) after the banking and insurance group's share price plunged in recent days.

While Citigroup edges higher, Wachovia has lost nine-tenths of its value. Other regional banks also hit the skids, with National City, Sovereign (LSE: SOGP.L - news) , First Horizon, Fifth Third and Regions Financial (NYSE: RF - news) all losing a fifth of their value or more.

Concern about the likelihood of the government-sponsored bail-out plan making it through Congress and the consequences for the wider economy if it fails has hit the likes of and earth-moving equipment manufacturer Caterpillar (NYSE: CAT - news) .

Even glamour stock Apple (NASDAQ: AAPL - news) receives harsh treatment today after the iPhone maker's shares were cut to "equal weight" from "overweight" by Morgan Stanley (NYSE: MS - news) . The US bank is predicting a 10% slump in the Apple share price as slowing demand becomes evident.

Copper miner Freeport McMorRan wilts after Deutsche Bank (Xetra: 514000 - news) cut its rating on the stock from "buy" to "hold", as the copper price heads into reverse.

On the economic front, US personal income rose 0.5% in August after falling 0.7% in July. Personal spending was unchanged in August after rising 0.2% the preceding month.

There have also been big losses on the energy markets. US light crude for delivery in November (Frankfurt: A0S9N7 - news) slumped $6 at one stage to under $101 a barrel on worries about the global economy.

S&P 500 - Risers Freddie Mac (NYSE: FRE - news) (FRE) $2.16 +8.00% Citigroup Inc. (C) $20.84 +3.42% Molson Coors Co Class B (TAP) $47.17 +1.64% Wells Fargo & Co (WFC) $37.90 +1.58% Campbell Soup Co (NYSE: CPB - news) (CPB) $38.22 +1.57% Express Scripts Inc (NASDAQ: ESRX - news) . (ESRX) $75.97 +1.46% Biogen Idec Inc (NASDAQ: BIIB - news) . (BIIB) $50.28 +1.02%

S&P 500 - Fallers Wachovia Corp. (WB) $0.93 -90.70% Natl City Corp. (NCC (Stockholm: NCCB.ST - news) ) $1.99 -46.36% Sovereign Bancorp (NYSE: SOV - news) (SOV) $5.52 -34.05% First Horizon Ntl Corp. (FHN) $8.09 -28.22% Genworth Financial (NYSE: GNW - news) (GNW) $6.16 -24.39% Fifth Third Bancorp (NASDAQ: FITB - news) (FITB) $12.22 -24.38% Regions Financial Corp. (RF) $11.07 -20.93%

Dow Jones I.A - Risers Citigroup Inc. (C) $20.84 +3.42% Kraft Foods Inc. (KFT) $32.95 +0.06%

Dow Jones I.A - Fallers American Express Inc. (AXP) $36.60 -7.34% Alcoa Inc (NYSE: AA - news) . (AA (5GZ.SI - news) ) $22.17 -5.82% Bank Of America Corp (NYSE: IKJ - news) . (BAC) $34.60 -5.72% Jp Morgan Chase Co (JPM) $45.79 -5.08% Walt Disney-Disney C (DIS) $31.13 -4.94% Caterpillar Inc. (CAT) $61.24 -4.51%

Nasdaq 100 (NASDAQ: news) - Risers Express Scripts Inc. (ESRX) $75.97 +1.46% Biogen Idec Inc. (BIIB) $50.28 +1.02%

Nasdaq 100 - Fallers Echostar Communications Corp. (DISH) $21.01 -14.42% Apple Inc. (AAPL) $110.89 -13.53%