CALDEIRÃO DE BOLSA

Associated Press
September 18, 2007 8:36 a.m.

LONDON -- Shares in troubled mortgage lender Northern Rock rose Tuesday, but worried depositors were again lining up to withdraw their money despite the government's promise to guarantee all savings.

Prime Minister Gordon Brown's government kept up a highly visible effort to calm the panic. Treasury chief Alistair Darling met with leaders of the Bank of England and the Financial Services Authority, and Mr. Brown's spokesman declared that the prime minister had "full confidence" in Bank of England governor Mervyn King.
[Savings] MORE COVERAGE

• Complete Coverage: Debt Dilemmas

The central bank announced that it had pumped £4.4 billion ($8.78 billion) into money markets, in the form of a two-day securities repurchase agreement, on Tuesday.

Northern Rock shares were up more than 11% at one point before falling back to a 7% rise on the London Stock Exchange, a small rebound compared to two previous trading days when shares fell more than 30% per session.

Mortgage lender Alliance & Leicester, which saw its shares drop 15% on Monday, was up 25%. Bradford & Bingley, another major mortgage lender, rose in early trading but was down 6% at midday after suffering an 11% drop a day earlier.

Some depositors remained jittery. About 50 people were waiting for the Northern Rock branch in Kingston-upon-Thames in southwest London before it opened at 8 a.m. "I don't know what we will do with the money yet, but I don't trust what the government says," said Doria Watson, waiting in line with her husband. "We were here yesterday but were told we had no chance of getting in, so we are back today and will wait as long as we have to."

"What the government has said gives us more hope, but there is still doubt and I am not taking any chances," added Joyce Hutton, who said she had been in line Monday but never got in.

Mr. Darling announced late Monday that the government would guarantee the savings of Northern Rock depositors. Hundreds had ignored earlier pleas for calm and joined long lines outside the branches in Britain and Ireland, seeking to withdraw their funds.

"I do recognize that people are concerned, that's why we have put the matter beyond all doubt," Mr. Darling said at a news conference after a meeting with U.S. Treasury Secretary Henry Paulson. Deposits "are safe and are guaranteed, that's unequivocal," Mr. Darling added.

"They should have made this announcement on Friday or Saturday," said Janet Taylor, 63, who was waiting outside a Northern Rock branch in central London. "My confidence is gone." Jennie Andrews, 38, a secretary, took her lunch break early to stand in line. She said shortfalls in pension funds and the failure of endowment mortgage plans to perform as advertised had made Britons wary. "No one has confidence anymore," Ms. Andrews said.

But the Financial Services Authority said Northern Rock "is solvent, it is not in trouble." "We haven't had a regulatory failure here yet," said Hector Sants, chief executive of the FSA. "This bank is solvent and rightly open for business and deposits are safe. The system has worked."

Copyright © 2007 Associated Press