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Bank of England to rescue UK lender

The Bank of England will on Friday provide emergency funding to rescue Northern Rock, a leading UK mortgage lender that has fallen victim to the credit squeeze triggered by the US subprime meltdown.

Northern Rock, which had more than $200 billion in assets at the end of June, is the first UK financial institution to be propped up since the Bank of England in 1998 revised the rules under which it would act as a lender of last resort. The Bank is expected to say on Friday that a similar facility is available to any other institution facing short-term difficulties.

Details of the rescue emerged late Thursday after a relatively calm day on global markets. US stocks closed higher after Countrywide, the US mortgage giant that has had trouble borrowing in the money markets, secured $12 billion additional funding from its banks. The cost of three-month borrowings in the interbank market fell slightly for dollar, euro and sterling instruments after soaring recently. (