US launches foreclosure relief program

March 5, 2009
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, WASHINGTON, March  5 – The United States on Wednesday launched a foreclosure relief program to help distressed homeowners, while markets found their own relief in reports that China will announce a new stimulus plan.

Wall Street snapped a five-day losing streak, with investors encouraged by President Barack Obama\’s administration launch of a 75-billion-dollar rescue plan to stem rising home foreclosures.

European markets also staged strong rebounds after days of losses.

The US Treasury Department said between seven and nine million homeowners could be helped through the program launched Wednesday, through either home loan modifications or mortgage refinancings.

"It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets," Treasury Secretary Timothy Geithner said.

The government\’s release of a detailed blueprint for stabilizing the housing sector came amid news of a further deterioration in the US jobs market that suggested a bleak reading from the Labor Department on Friday.

The US private sector shed a greater-than-expected 697,000 jobs in February as employers slashed payrolls to cope with the shrinking economy.

The Institute of Supply Management, meanwhile, reported a contraction in the huge US services sector intensified in February.

Adding to the gloom over the world\’s biggest economy, the Federal Reserve\’s Beige Book survey through February said activity "deteriorated further."

"Looking ahead, contacts from various districts rate the prospects for near-term improvement in economic conditions as poor, with a significant pickup not expected before late 2009 or early 2010," the report said.

Earlier, Australia reported the end of an eight-year economic growth period with a stronger than expected 0.5 percent contraction in the fourth quarter.

"Although the Australian economy has held up better than most other economies, the inevitable impact of the global recession is clearly evident in today\’s data," said Australian Treasurer Wayne Swan.

The announcement marked a sharp turnaround from Tuesday, when Australia\’s central bank left its key interest rate unchanged at 3.25 percent saying the economy was riding out the crisis better than most.

British Prime Minister Gordon Brown urged the United States to harness historic global goodwill to pull the world out of its economic slump and lead the charge against climate change.

"We should seize this moment because never before have I seen a world willing to come together so much, never before has that been more needed," Brown said in a landmark speech to a rare joint session of the US Congress in Washington.

Unemployment soared to more than 10 percent in once-booming Ireland and France warned its public deficit would rise to a record level in 2009.

In Ireland, Prime Minister Brian Cowen said he would present a new emergency budget next month and warned austerity measures were needed "however difficult they may be" despite mass protests over the crisis in February.

In Brussels, European Commission chief Jose Manuel Barroso said the European Union would help out any member state facing financial collapse and a new survey showed service sector activity in the eurozone hitting record lows.

Chinese state media meanwhile reported that a high-level business delegation will visit Europe this weekend to look for companies to buy up after a visit last month netted more than 13 billion dollars in deals.

Stock markets rebounded in some profit taking after heavy routs.

The Dow Jones Industrial Average rallied 149.82 points (2.23 percent) to close at 6,875.84, as the blue chips rose from 12-year lows.

The technology-dominated Nasdaq climbed 32.73 points (2.48 percent) to 1,353.74 and the Standard & Poor\’s 500 index jumped 16.54 points (2.38 percent) to 712.87.

Andy Brooks, equity strategist at T. Rowe Price said: "Everybody is expecting a huge stimulus package from the Chinese tonight."

He added that "materials, commodities and steel (were) the real big movers and that\’s because of the Chinese stimulus."

In Europe, London FTSE 100 index of leading shares closed up 3.81 percent to 3,645.87. In Frankfurt, the DAX index jumped 5.43 percent to 3,890.94 and in Paris the CAC 40 put on 4.74 percent to reach 2,676.68.

Chinese shares soared 6.12 percent, extending recent gains on hopes Beijing will unveil more measures to boost the economy which appears to be weathering the crisis better than most.

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