By Jakob Lindstroem, Bloomberg

Iceland’s benchmark stock index plunged 77 percent, the biggest decline on record, as trading resumed after a three-day suspension and the nationalization of the country’s largest banks.

Investors demanded a higher premium to hold Icelandic government bonds, while the price of the country’s currency remained “undetermined,” according to TD Securities.

The global financial crises sparked the collapse this month of Kaupthing Bank hf, Glitnir Bank hf and Landsbanki Islands hf with debts equivalent to as much as 12 times the size of Iceland’s economy. The three banks accounted for about 76 percent of the OMX Iceland 15 Index’s value prior to the nationalization.

“We are quite far away from having it up and running in terms of anybody being able to invest, or disinvest in the Icelandic stock market,” said Lars Christensen, a senior strategist at Danske Bank A/S in Copenhagen. “Given that we don’t have a normally functioning exchange-rate market, a fixed income market, we don’t have a clearing system between the banks internally, it’s hard to talk about any well-functioning stock market.”

The OMX Iceland 15 fell 2,326.22 to 678.40, the lowest since April 1996. The gauge has lost 89 percent this year, making it the worst performer among 88 equity indexes tracked by Bloomberg News. Four of the 13 other stocks in the index didn’t trade, while the six that did accounted for about 8.5 percent of the measure’s weighting before today. Read more….

By Harry Wallop, Telegraph

Alistair Darling promises all UK savers they will get money back

The chancellor’s guarantee will come as a relief to the estimated 300,000 British savers who were left fearful on Tuesday night that they would need to fight for any compensation.

The popular internet bank was owned by Landsbanki, Iceland’s second largest bank, which has been swept up in the financial chaos that has engulfed the tiny Arctic country.

The bank has collapsed into receivership and is now being run by the Icelandic Financial Services Authority and all withdrawals from the accounts have been frozen.

Initially, the British authorities said that any saver would need to seek compensation from the Icelandic compensation scheme for their first €20,887 (£16,240). The UK compensation scheme would only kick in above that amount and then only up to £50,000.

This left thousands of savers angry and worried that the Icelandic scheme – with just £88 million of cash – would be able to cover the estimated £4 billion needed to rescue British savers. Read more….