Liquidity boost set to lift Wall Street at open
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By Ellis MnyanduNEW YORK (Reuters) - Stocks were poised to open higher on Thursday, helped by a coordinated push by the world's leading central banks to pump billion of dollars into global financial markets to thaw the credit freeze.Even so, investors appeared to tread cautiously, with uncertainty surrounding more possible mergers and ways to stabilize the beleaguered financial sector following the demise of Lehman Brothers and a bailout of insurer American International Group .The Federal Reserve, European Central Bank, Bank of Japan and others said they would provide more than $180 billion in extra dollar funds, a day after world stock markets plunged on fears of the latest turmoil seizing major financial institutions.Morgan Stanley , among stocks that took a heavy blow on Wednesday, is again in the spotlight as investors wondered whether it and rival Goldman Sachs , the last two U.S. investment banks left standing, could continue as independent entities.The news of added liquidity helped to ease the overnight dollar inter-bank lending rate, whose sharp spike in the last two days came as a crisis of confidence caused banks to horde cash."The central banks, I think, recognized that the hold-up is around liquidity and that's what they are addressing," said Rick Meckler, president of investment firm LibertyView Capital Management in New York. "When you have had things deteriorate as much as they have, anything that shows a sign of steadying is an encouraging sign."S&P 500 futures rose 8.80 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures climbed 43 points and Nasdaq 100 futures gained 9.75 points.Morgan Stanley was in merger talks with U.S. regional banking powerhouse, Wachovia Corp , according to a source familiar with the matter.Additionally, CNBC television said Europe's HSBC Holdings <0005.HK> and China's largest financial conglomerate, CITIC Group, were also eyeing Wall Street's second-largest investment bank.But CITIC Securities, a unit of CITIC Group, said its parent was not talking about investing in Morgan Stanley.Separately, the New York Times, citing people familiar with the matter, said in a report that Morgan Stanley contacted Citigroup on Tuesday to discuss a merger.The scramble for likely deals in the beleaguered financial sector follows the takeover of insurer AIG by the U.S. government and the demise of Lehman, which on Monday filed for bankruptcy protection, saddled by losses stemming from the U.S. mortgage crisis.Shares of Wachovia climbed 7.5 percent to $9.80, while those of Morgan Stanley dropped 8.3 percent to $19.95.In other news, Washington Mutual Inc , the giant U.S. savings and loan, has put itself up for sale, sources familiar with the matter said.The Seattle-based thrift has hired Goldman Sachs & Co and Morgan Stanley to run an auction and potential suitors include Citigroup Inc , HSBC, JPMorgan Chase & Co and Wells Fargo & Co , one source said.(Editing by Kenneth Barry)
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