A co-ordinated move by central banks to cut interest rates cheered financial markets Wednesday morning.

U.S. stock index futures moved higher Wednesday after central banks announced a co-ordinated move to cut interest rates.

Half-point rate cuts were announced jointly by the Bank of Canada, the U.S. Federal Reserve, the European Central Bank and the central banks of Switzerland and Sweden. China’s central bank also trimmed the cost of money.

In other international banking news, the UK government today announced a US$87.5 billion plan on to partly nationalize major banks, with taxpayers taking stakes in a bid to shore up a financial sector hard hit by the world financial crisis.

The government also offered up to US$350 billion in short-term lending support.

European markets tumbled in early trading Wednesday despite the UK rescue package.

Banking stocks were among the biggest losers, with Credit Suisse AG, BNP Paribas SA and Societe Generale some of the worst hit. However, British banks have fared slightly better.

In mid-morning trade, the CAC-40 index in France was 229.33 points, or 6.1%, lower at 3,502.89, while Germany’s DAX was down 323.99, or 6.1%, at 5,002.64. The FTSE 100 index of leading British shares was 237.22, or 5.2% lower, at 4,367.50.

In Asia, markets fell sharply with the benchmark Japanese Nikkei 225 stock average plunging 9.4% — its biggest drop in 21 years — to 9,203.32, a five-year low.

Hong Kong’s Hang Seng index shed 5.2%.

Commodity prices continued their retreat on Wednesday.

The near-month contract for light sweet crude was down US$1.26 at US$88.80 a barrel on the New York Mercantile Exchange, while copper faded 8.8¢ to US$2.4465 a pound.

The Canadian dollar opened at US90.01¢, down 0.30 of a cent.

On Tuesday, stocks in Toronto continued their descent, plunging past the 10,000 mark as concerns over the credit crunch continued to be top of mind for investors.

The S&P/TSX composite index fell 400.88 points, or 3.92%, to close at 9,829.55.

The S&P/TSX Venture lost 39.64 points, or 3.5%, to close at 1,094.46.

In New York, the S&P 500 finished the day at a five-year low, down 60.66 points, or 5.74%, at 996.23. The Dow Jones industrial average lost 508 points, or 5.1%, to close at 9,447.11. The Nasdaq composite index fell 108.08 points, or 5.8%, to close at 1,754.88.

IE