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Recovery on Wall Street continues Recovery on Wall Street continues
(about 13 hours later)
Shares on Wall Street have pushed higher with investors encouraged by efforts to boost the US economy and deal with the credit crunch. Shares on Wall Street closed higher with investors encouraged by the White House and Congress agreeing a $150bn (£76bn) economic stimulus plan.
In early afternoon trade, the main Dow Jones index was up 52 points to 12,280, while the Nasdaq was 18 points higher. With 117 million US homes set to get a tax rebate, both politicians and the markets hope it will lift consumer spending and ease recession fears.
In Europe, London's FTSE 100 index closed up 4.75%, while both Frankfurt's Dax and Paris' Cac ended up 6%. The main Dow Jones index ended up 108 points to 12,379, while the Nasdaq added 45 points to 2,361.
The rebound came on hopes of a rescue plan for US bond insurers that could prevent a new wave of asset writedowns. In Europe, London's FTSE 100 rose 4.75%, while Frankfurt's Dax added 6%.
The plan would bail out bond insurers, which lie at the heart of the financial system, guaranteeing about $2 trillion of assets. Continuing market fears
"It would be logical that US and European banks would coordinate with regulators in the United States to help bail out these insurers," said Edmund Shing, strategist at BNP Paribas in Paris. US investor sentiment was further lifted by hopes of a rescue package for US bond insurers that could prevent a new wave of asset writedowns.
"If these guys would fail, it would be much more catastrophic for banks' balance sheets and we would see another round of writedowns."
On Wednesday, news of the plan led to a late rally in US stocks, with the Dow Jones closing up 2.5% and the Nasdaq up 1%.
Asian trading
The rally on Wall Street spread to Asia, with Japan's benchmark Nikkei index closing 2.1% higher on Thursday.
However, in Hong Kong, the Hang Seng index ended the day down 2.3% in volatile trading, with the index reversing early gains on news of a large writedown of sub-prime-related assets at French bank Societe Generale.
You do have to rescue markets, otherwise you would go into a depression, as you did in the 1930s George Soros Chill on Wall StreetSend us your commentsYou do have to rescue markets, otherwise you would go into a depression, as you did in the 1930s George Soros Chill on Wall StreetSend us your comments
Panic had swept through stock markets worldwide earlier this week on fears that key global economies would enter recession. This plan would bail out bond insurers, which lie at the heart of the financial system, guaranteeing about $2 trillion of assets.
On Tuesday, the US Federal Reserve made its biggest rate cut for 25 years - slashing its main interest rate to 3.5% from 4.25% - to try to lift growth and bolster markets. Panic had swept through stock markets worldwide earlier this week as fears that key global economies would enter recession sparked sharp share falls.
On Tuesday, the US Federal Reserve responding by making its biggest rate cut for 25 years - slashing its main interest rate to 3.5% from 4.25% - to try to lift growth and bolster markets.
However, worries persisted that the move might have come too late, as many firms have already reported lower profits and a worsening business environment.However, worries persisted that the move might have come too late, as many firms have already reported lower profits and a worsening business environment.
Earlier this week, billionaire investor George Soros told the BBC it was going to be difficult for the UK and US to avoid a recession, even after the Fed's dramatic rate cut.Earlier this week, billionaire investor George Soros told the BBC it was going to be difficult for the UK and US to avoid a recession, even after the Fed's dramatic rate cut.
But Mr Soros said he supported the Fed's move.But Mr Soros said he supported the Fed's move.
"You do have to rescue markets, otherwise you would go into a depression, as you did in the 1930s," he said."You do have to rescue markets, otherwise you would go into a depression, as you did in the 1930s," he said.