Barclays are set to raise up to £7.3bn in a proposed deal that will strengthen its balance sheet and maintain the banks independence.

The money will be mainly raised from the state investment funds and royal families of Qatar and Abu Dhabi.

If the deal is completed as expected, the Middle Eastern investors will have an almost 32% stake in Barclays.

Barclays shares initially rose on the news, but later reversed course as investors worried about the cost of the funding. Rumours in the city say the interest rates charged may be up to 14%.

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The US Federal Reserve today cut  interest rates by a  half percentage point and it left the door open to further reductions if needed.

The unanimous decision takes its target for overnight bank lending to 1%, the lowest since June 2004. Wall Street was united in the opinion the Fed would lower rates, although opinions were split on the likely size of the move.

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UK and other European shares have risen sharply in early trading this morning.
This follows rallies on Wall Street yesterday where the Dow Jones closed up 10.88%, or 889.35 points, at 9,065, its second biggest one-day points rise.

This US rally helped Japan's Nikkei index end Wednesday up 7.7%, with Japanese sentiment further lifted by hopes of a rate cut in Tokyo.

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European markets have all opened sharply lower following large falls overnight on the Asian markets.

The Japanese Nikkei index falling 6.4% to its lowest close since 1982.
In Hong Kong, the Hang Seng closed down 12.7% in its biggest single-day fall since 1991.

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The United Kingdom Gross Domestic Product (GDP) decreased by 0.5 per cent in the third quarter of 2008, compared with a 0.0 per cent movement in the previous quarter. Weaker service industries, construction and production output drove the deceleration in growth.

Construction output decreased by 0.8 per cent, compared with a decrease of 0.5 per cent in the previous quarter. ... more