Central banks open their vaults

The world’s top central banks said they will pump more than $180 billion in extra dollar funds into the financial markets today, in a coordinated effort to restore liquidity to the market. The participating banks are the U.S. Federal Reserve, the European Central Banks, and the central banks of England, Canada, Japan, Britain, and Switzerland. The $180 billion is on top of regional efforts to inject cash into local currency markets. (Reuters) In Asia, meanwhile, the Wall Street upheaval is prompting central banks, companies, and individuals to rethink the wisdom of their trillions of dollars invested in the U.S. A loss of confidence in the U.S. by Asian investors would have dire consequences for U.S. taxpayers and their government. (The New York Times)

Britain’s Lloyds TBS buys lender HBOS

British bank Lloyds TBS agreed to buy Edinburgh-based HBOS, the largest U.K. mortgage lender, for $22.2 billion, in a government-backed merger. The combined firm will control 28 percent of Britain’s mortgage market and own 3,300 consumer bank branches. (Bloomberg) HBOS, which relies heavily on wholesale markets, lost about half of its value this week after the collapse of Lehman Brothers left investors worried about its ability to obtain funding. (MarketWatch) “We had expected HBOS would struggle to make a profit through 2010, but we had not expected it would fall victim to the credit crunch,” said analyst Sandy Chen at Panmure Gordon. (Reuters)

Morgan Stanley, Washington Mutual mull buyouts

As their shares get battered, Washington Mutual and Morgan Stanley are reportedly considering takeover offers to avoid a Lehman-like collapse. ( Washington Mutual, beset by soured mortgages, is exploring a sale, whole or piecemeal, to bidders including JPMorgan, Citigroup, Wells Fargo, and HSBC. (Reuters) Morgan Stanley, meanwhile, is in talks with Wachovia, although it is also reportedly exploring deals with overseas banks like HSBC, Banco Santander, and Japan’s Nomura. (The Wall Street Journal) “If we could get some deals done, that will add some confidence to the market,” said Jack Ablin at Harris Private Bank in Chicago. “Banks are as cheap as they’ve been ever, relative to the rest of the market.” (Bloomberg)

Gold jumps, jewelers groan

The price of gold jumped by $70.10 an ounce yesterday, to $846.60, in the highest ever one-day gain in dollar terms, as investors fled to safety from tanking stock prices. And in Los Angeles, that’s bad news in the Jewelry District, which has seen a 70 percent drop in traffic this year as potential customers saw their discretionary spending dry up. And those customers that do come are mainly interested in items under $100, which have slimmer profit margins. “The economy’s so bad customers can’t even pay their mortgages,” said Raymond Cohan of Acapulco Jewelry, where a $1,000 gold chain cost only $450 a year ago. “This is the last thing on their list to buy.” (Los Angeles Times)