Credit Watch: Fed to Pump More Funds Into Markets

The French bank hardest hit by the market crisis, investment bank Natixis, on Sunday put the cost at 407 million euros ($602.6 million) for its third-quarter results.

Its parent companies, unlisted Banque Populaire and Caisse d'Epargne, bailed out the subsidiary on Nov. 22 by taking over the CIFG bond insurance unit where they plan a capital injection of around $1.5 billion.

The ECB on Monday repeated a statement made late on Friday, saying it "has noted re-emerging tensions in the euro money market" and promising to keep adding extra liquidity in its market tenders.

Banks have taken repeated hits on their balance sheets in recent weeks and have started hoarding cash again, fearing renewed funding problems over the holiday period.

These worries drove London interbank offered rates for two-month euro deposits to new six and a half-year highs on Monday and three-month euro rates rose for the ninth straight session.

Hedge Funds Oppose Northern Rock Deal

Meanwhile a deal for Northern Rock could face problems from shareholders. Its top two investors -- hedge funds RAB Capital and SRM Global -- have urged advisers to scrap the sale process to prevent any firesale.

But Virgin's proposal may calm a mounting political dispute about the use of taxpayer funds to help Northern Rock and also offers some potential upside to shareholders. Analysts said both factors are likely to have sealed its success.

The authorities had to step in to support Northern Rock to halt the first run on a major British lender since the 19th century.