Lending between banks remained frozen worldwide on Friday as investors nervously awaited a U.S. House of Representatives vote on a $700 billion financial rescue plan. Key interest rates for the banking industry extended their upward climb. Three-month dollar “Libor” rates rose to 4.33375 percent, the highest since early January, while their euro-denominated equivalent jumped to a record. The credit crisis was forcing central banks to continue injecting cash into the global banking system in an effort to lubricate stalled capital markets, which are suffering from mistrust between financial companies. Adding to the anxiety was fear over the outcome of the House of Representatives vote on rescue legislation aimed at stabilizing the banking sector, whose problems appear to be spilling into the broader U.S. economy. For instance, the U.S. labor market posted its worst performance in over five years in September, with 159,000 jobs eliminated, and the U.S. manufacturing activity has fallen to its lowest level in seven years.
