Bloomberg.com reports the euro fell a second day against the dollar as France and Belgium led a state-backed rescue of Dexia SA, the world's biggest lender to local governments. The 15-nation currency also weakened against the British pound after Belgian Prime Minister Yves Leterme said Dexia will receive about $9.2 bln to shore up its capital. The dollar rose against the yen on speculation the U.S. Senate will salvage a $700 bln bank-bailout plan as early as tomorrow after Congress rejected it yesterday. The yen dropped against 14 of the 16 most active currencies as European stocks rose, reviving purchases of higher-yielding currencies funded in Japan. Dexia is being rescued after its shares had a record decline yesterday. The capital infusion comes two days after Belgium, the Netherlands and Luxembourg rescued Fortis, the largest Belgian financial-services company, Britain took control of Bradford & Bingley Plc, the country's biggest lender to landlords, and Germany bailed out Hypo Real Estate Holding AG.

Bloomberg.com reports the euro fell a second day against the dollar as France and Belgium led a state-backed rescue of Dexia SA, the world's biggest lender to local governments. The 15-nation currency also weakened against the British pound after Belgian Prime Minister Yves Leterme said Dexia will receive about $9.2 bln to shore up its capital. The dollar rose against the yen on speculation the U.S. Senate will salvage a $700 bln bank-bailout plan as early as tomorrow after Congress rejected it yesterday. The yen dropped against 14 of the 16 most active currencies as European stocks rose, reviving purchases of higher-yielding currencies funded in Japan. Dexia is being rescued after its shares had a record decline yesterday. The capital infusion comes two days after Belgium, the Netherlands and Luxembourg rescued Fortis, the largest Belgian financial-services company, Britain took control of Bradford & Bingley Plc, the country's biggest lender to landlords, and Germany bailed out Hypo Real Estate Holding AG.

In Europe, mkts dropped to a three-and-a-half year closing low, with banks weighing on the benchmark index amid persistent worries about the health of the financial industry on both sides of the Atlantic. Fortis received 11.2 bln euros of capital on Sunday, in a combined rescue by the Belgian, Dutch and Luxembourg Govts, after shares in the banking and insurance group plummeted to 15-year lows amid liquidity worries last week. News that the Icelandic govt had bought a 75% stake in Glitnir, the Atlantic island's third largest lender, for 600 mln euros added to the sense crisis in the European banking industry... In the UK, the FTSE tumbled 5.3% following the British govt's decision to nationalize troubled mortgage bank Bradford & Bingley combined with renewed financial turmoil across Europe. Of banks stocks, Barclays (BCS) fell 8.8%, HBOS dropped 18.1% and Lloyds TSB (LYG) fell 13.5%. Royal Bank of Scotland (RBS) fell 13%... In Germany, the DAX fell 4.2% after the government and a group of banks had to bail out Hypo Real Estate Holding AG with a 35 billion-euro ($50 billion) loan guarantee. Hypo Real Estate tumbled 74% after receiving emergency funding and saying it plans to scrap its 2008 dividend. The rescuers of the bank will pay the guarantee in two allotments, of about 15 billion euros and 20 billion euros, Finance Ministry spokesman Torsten Albig said... In France, the CAC dropped 5.0%. In economic news, the number of jobseekers rose by 41,300 as companies weathering a global economic slowdown shelved hiring plans. Dexia plunged 27% as the co scheduled a second board meeting to discuss the financial market crisis following the bailout of Fortis. The bank may need to raise capital to reassure the markets, French daily Le Figaro reported... In Russia, the RTS slid 7.1% as lower oil prices and fears over the state of the global banking sector more than offset progress on the U.S.' financial markets bailout package. Prime Minister Vladimir Putin pledged further support, saying state development bank VEB would offer Russian companies as much as $50 billion in loans to refinance foreign borrowing, the Interfax news agency reported. (Sources: Bloomberg, Reuters, DJ)

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