The US financial system was shaken by fears that a $700bn government rescue plan might not be enough to end the financial crisis yesterday as the dollar sank, stock markets tumbled and once mighty Wall Street names turned to Japan to safeguard their future.
Morgan Stanley announced it was to sell a stake of 10-20 per cent to Mitsubishi UFJ in a deal worth $9bn. The news came just hours after Nomura, Japan's largest broker, confirmed it was buying Lehman Brothers' operations in Asia and was in exclusive talks to secure parts of its business in Europe.
Investors' negative reaction to the plans for a $700bn government fund to buy toxic assets from banks and Morgan Stanley's Japanese gambit underline the fragile state of the US economy and its banking sector.