Iceland shuts stock exchange

Crisis-hit Iceland suspended trading on its stock exchange until Monday today.

The OMX Nordic Exchange Iceland said the decision was due to "unusual market conditions".

Iceland is sinking deeper into financial turmoil as its top-heavy banking system collapses.

The Icelandic government now has control of all three of the country's major banks - Kaupthing, Landsbanki and Glitnir - as it struggles to contain the panic.

The crisis is also hitting several other countries in Europe, where thousands of people have accounts with subsidiaries of the Icelandic banks.

Earlier today Iceland's third largest bank group Kaupthing was taken over by the Icelandic Financial Supervisory Authority.

The Finnish Financial Supervision agency immediately halted Kaupthing's operations and appointed a supervisor. The Icelandic bank's online bank was not working.

Kaupthing board chairman Sigurdur Einarsson said in a statement that the bank had approached the Icelandic authorities and that the entire board of directors of the bank has resigned.

The move was linked to the knock-on effect of big withdrawals by British depositors from rival banking group Landsbanki's deposit account Icesave in Britain, and the subsequent "significant increase in the outflow of deposits from Kaupthing Edge (Kaupthing's UK online savings arm)" in Britain, he said.

Kaupthing's domestic deposits were "fully guaranteed" and domestic operations were to remain open for business as usual, the Financial Supervisory Authority said adding that the move was to "guarantee a functioning domestic banking system."

The Swedish central bank yesterday approved a £350 million loan to the Swedish branch of Kaupthing, Kaputhing Bank Sverige which said today it would continue its operations with sufficient liquidity.