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US stocks rise on bail-out hopes US stocks rise on bail-out hopes
(about 1 hour later)
Leading US shares edged up in early trade, ahead of key comments from US Treasury Secretary Henry Paulson on the $700bn (£382bn) financial bail-out.Leading US shares edged up in early trade, ahead of key comments from US Treasury Secretary Henry Paulson on the $700bn (£382bn) financial bail-out.
The Dow Jones industrial average was up 24.77 points, or 0.22% at 11,040.46. The Dow Jones industrial average was up 24.77 points, or 0.22%, at 11,040.46.
The rise came after share prices in Europe and Asia declined as investors remained uncertain about how the plan would be put into practice. The rise came after share prices in Europe and Asia had declined with investors uncertain about how the rescue plan would be put into practice.
The bail-out was set out in a bid to help banks offload bad debt, and boost markets after huge market volatility. The bail-out plan aims to help banks offload bad debt and boost markets after huge market volatility.
But despite positive reaction to the plan, doubts over how soon the rescue plan could be applied have emerged from both the Democrats and Republicans. 'Private greed'
London's FTSE 100 fell 2.5%, the Cac 40 in Paris slid 1.9% and Frankfurt's Dax was down 1%. Hong Kong's Hang Seng index ended nearly 4% lower. Despite positive reaction soon after the plan was announced, doubts over how soon the rescue plan could be applied have emerged from both the Democrats and Republicans.
Banks were among the main fallers with Deutsche Bank shares falling 3.5%, Royal Bank of Scotland 3.1% lower and Swiss firm UBS down 2%. Mr Paulson and others on the Senate Banking Committee met tough questions at a Congressional hearing on Tuesday.
Markets are also waiting to hear comments from Federal Reserve head Ben Bernanke before the Senate Banking Committee. Senators from both parties voiced concerns that taxpayers would be paying the price of mistakes made by banks.
Until Lehman brothers collapsed, Japanese financial institutions were pretty confident BBC's Chris Hogg in Tokyo Global reaction to financial turmoilUntil Lehman brothers collapsed, Japanese financial institutions were pretty confident BBC's Chris Hogg in Tokyo Global reaction to financial turmoil
The White House says Congress must back the rescue plan to stop wider economic harm. They also said it was crucial not to rush through the bail-out, without carefully considering how it would work.
The Government of Singapore Investment Corporation (GIC), a sovereign wealth fund that has acquired shares in UBS and Citigroup, expressed concerns over the risks of stalling the rescue plan. Richard Shelby, a senior republican on the Senate Banking Committee said: "I have long opposed government bail-outs for individuals and corporate America alike."
Dissent And Senator Chris Dodd, a Democrat and the committee's chairman, said the "economic maelstrom" stemmed from a mixture of "private greed and public regulatory neglect".
In the US on Monday, the Dow Jones index closed 372.75 points, or 3.3% lower, at 11,015.6, wiping out the gains made during Friday's rally. In prepared remarks, US Federal Reserve head Ben Bernanke said: "Action by Congress is urgently required to stabilize the situation and avert what could otherwise be very serious consequences for our financial markets and our economy."
Banking shares were particularly hard hit, as many investors switched to commodities such as oil and gold. Oil recorded its largest one-day gain in history on Monday. The White House has said Congress must back the rescue plan to stop wider economic harm.
class="lp" href="http://news.bbc.co.uk/1/hi/talking_point/default.stm">HAVE YOUR SAYWhy do the world's governments insist on bailing out failing banks with our money?Frustrated, Cardiff class="" href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=5352">Send us your comments On the European markets, the UK's FTSE 100 was trading down 2.1%, France's Cac 40 was 2% lower, while in Germany the Dax was down 0.1%.
US lawmakers have been holding talks with the administration on the proposed bail-out. Earlier in Asia, Hong Kong's Hang Seng index ended nearly 4% lower. Japan's market was closed for a public holiday.
The plan allows Treasury Secretary Henry Paulson to set up a fund to buy back much of the bad debt held by US banks and financial institutions.
But with the immediate sense of imminent collapse now passing, dissenting voices are beginning to emerge, says the BBC's Kevin Connolly in Washington.
Contentious issues include limiting compensation for executives of rescued firms, wider help for US homeowners at risk of losing their homes and demands for oversight.
"The Bush Administration has called on Congress to rubber stamp its bail-out legislation without serious debate or efforts to improve it," said US Senate Majority Leader Harry Reid. "That will not happen," he said.
Richard Shelby, a senior republican on the Senate Banking Committee, also hit out at the plan.
"It would be foolish to waste massive sums of taxpayer funds testing an idea that has been hastily crafted," he said.
Will the $700bn package stabilise the economy? Are you in the US? How do you think the money should be best spent?Will the $700bn package stabilise the economy? Are you in the US? How do you think the money should be best spent?
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