AIG in focus as financial meltdown spreads
American International Group Inc, thrown a $20 (11.1 billion pounds) billion lifeline by New York state, came under renewed pressure on Tuesday as ratings agencies downgraded the insurer's debt and the financial sector meltdown spread.
Latin America seeks to defuse crisisFears that AIG, once the world's largest insurer by market value, could be the next financial giant to tumble fuelled worries about the potential fallout.
"If AIG tanks, that will be the big one. AIG has more to do with the oil price right now than the Saudis do," said Larry Grace, an energy analyst at Kim Eng Securities in Hong Kong.
Asian share markets, many of them closed for a holiday on Monday, tumbled as investors absorbed the weekend's dramatic events on Wall Street, where Lehman Brothers filed for bankruptcy protection and rival Merrill Lynch agreed to be sold to Bank of America for $50 billion.
Big European markets were seen opening around 3 percent lower.
Shares in AIG plunged nearly 61 percent on Monday and the U.S. Federal Reserve hired investment bank Morgan Stanley to review options for the firm, a person familiar with the situation said on Monday. AIG has lost 92 percent of its value this year.
Barclays, which over the weekend pulled out of rescue talks for Lehman, was reported by the Wall Street Journal to be in talks to buy large portions of Lehman.
"We do not comment on market rumours," said Angie Tang, a Barclays spokeswoman in Hong Kong.
EYES ON AIG
AIG's ratings downgrade could force it to post more collateral and nullify insurance contracts, possibly setting in motion a chain reaction that could threaten its survival.
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