* Central banks cut rates together
* Stock markets stay negative
* Wall Street set for poor start
* Investors move to gold, bonds, yen
* Britain bails out banks
By Jeremy Gaunt, European Investment Correspondent
LONDON, Oct 8 (Reuters) - Stock markets remained mired in
steep losses on Wednesday, battered by fears about the world's
worst financial crisis in nearly 80 years and gaining only
temporary relief from globally coordinated interest rate cuts.
Wall Street looked set to open lower, in line with stock
markets in Asia and Europe.
Reaction to the cuts -- which came from the U.S. Federal
Reserve, European Central Bank, Bank of England and People's
Bank of China, among others -- initially led equity investors to
trim deep losses on many bourses.
Immediate euphoria dissipated quickly. MSCI's main benchmark
index of world stocks<.MIWD00000PUS>, for example, remained
near 4-year lows, down 2.7 percent and around where it was when
the cuts were announced.
Its emerging market stock counterpart <.MSCIEF> was off 7.4
percent.
The pan-European FTSEurofirst 300 index <> was down
3.6 percent versus 2.9 percent before the cuts. Tokyo's Nikkei
share average <>, which closed long before the central bank
moves, plummeted 9.4 percent.
Government debt prices jumped on the overall equity selloff
and investors grabbed anything resembling stability, such as
gold which rose <XAU=> 3 percent and the low-yielding Japanese
yen.
"It's helpful," said Jim Awad, chairman of W.P. Stewart &
Co, referring to the concerted moved by central banks. "It's a
happy constructive event. It's part of a process, but it's not
sufficient."
The rate cuts were just part of efforts by various
authorities to inject calm and money into the battered financial
system.
Britain unveiled a multibillion pound rescue package for its
banks that included plans to inject up to 50 billion pounds
($87.84 billion) of government money into the country's biggest
operators.
It was designed to offer banks short-term liquidity, make
new capital available and give the banking system enough funds
to maintain lending in the medium-term.
Investors had been calling for rate cuts before Wednesday's
move. Some now say they want more.
"Where we go from now for rates is unclear, and we would
suggest that rates should probably come down again," said Philip
Shaw, economist at Investec.
HISTORIC LOSSES
The losses on stock markets this week have been huge.
MSCI's world index, a gauge which many investors use to
judge their performance, has already lost around 11 percent
since Friday's close and is on track for its worst week in the
20 years it has been in its current form.
The emerging market benchmark is in the same boat, losing
around 17.6 percent for the week to date.
"Obviously equities are not the flavour of the month to put
it mildly," said Peter Dixon, UK economist at Commerzbank.
In money markets -- at the heart of the crisis because of a
freezing up of lending -- global interest rate cuts failed to
remove persistent stress with the cost of interbank borrowing
staying way above official interest rates.
Three-month dollar interbank rates were quoted at 5.85/6.21
percent on the Reuters system <USD3MD=> after the move by
central banks. Just minutes before the rates announcement, the
Libor dollar rate for three months was fixed higher on the day
at 4.52375 percent.
This compares with market expectations that the Federal
Reserve rates will be around 1.25 percent by January compared
with the new rate of 1.50 percent.
Euro rates for the same period stood at 5.30/40 percent on
Reuters system <EUR3MD=>, compared with the new benchmark ECB
rate of 3.75 percent.
YEN JUMPS, YIELDS FALL
The low-yielding yen surged across the board as investors
rushed to unwind riskier positions. The central bank cuts
trimmed the gains
The yen hit a 6-month high against the dollar <JPY=> and a
3-year high against the euro <EURJPY=>, while higher-yielding
currencies such as the Australian dollar fell sharply against
the yen.
The dollar was down 1.4 percent at 99.84 yen, after hitting
a low of 98.62 yen, according to Reuters data. The euro was down
1.2 percent at 136.12 yen.
Interest rate-sensitive two-year Schatz yields <EU2YT=RR>
was down 19 basis points at 2.992 percent.
(Editing by Keith Weir)
