TEXT OF INTERVIEW

Scott Jagow: Perhaps the rain is gone, and things are looking brighter for the financial markets. There were big gains in Asia and Europe today. In Japan, stocks climbed 2 percent. They were up 6 percent in Hong Kong. And the European markets have gained about 3 percent so far. JP Morgan’s increased offer for Bear Stearns is a big reason for the rally.

We’re joined by our European correspondent, Stephen Beard. Stephen, is that what’s driving all the buying?

Stephen Beard: Well, I think probably the improved offer for Bear Stearns, the five-fold increase in fact in that offer, has encouraged many investors here to believe that America’s investment crisis may be drawing to a close. Also, yesterday’s unexpected rise in U.S. home sales has suggested to some that the U.S. housing market is not in free-fall, and therefore the whole crisis over the value of mortgage-backed securities may be drawing to an end.

Jagow: One thing I’m not quite clear about is, so Bear Stearns shareholders will get a few more dollars per share. Why has that caused such a rally in the markets?

Beard: I think it has an enormous symbolic importance. The shock of Bear Stearns was absolutely huge — here you have America’s fifth-largest investment bank, which last year was worth $160 a share, a week ago it was suddenly being sold off for $2 a share. That was a tremendous shock to confidence. The fact that it can now be rescued at five times that knockdown price, of course they’re not back into $160 a share territory, but it’s an improvement in sentiment. It shows that perhaps we are beginning to bottom out.

Jagow: All right, Stephen Beard in London. Thank you.

Beard: OK, Scott.