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US rescue plan sparks Asian rally US rescue plan sparks Asian rally
(about 1 hour later)
Asian share indexes bounced back on Thursday, boosted by an earlier rally on Wall Street.Asian share indexes bounced back on Thursday, boosted by an earlier rally on Wall Street.
Japan's benchmark Nikkei index closed 2.1% higher, while shares climbed by more than 2% in Mumbai, Hong Kong as well as Sydney. Japan's benchmark Nikkei index closed 2.1% higher, while key share indexes climbed by more than 2% in Mumbai, Hong Kong and Sydney.
The rebound came after the US publicised plans to stabilise its financial system. The rebound came on hopes of a rescue plan for US bond insurers that could prevent a new wave of asset writedowns.
US stock indexes had recovered after Tuesday's surprise decision by the Federal Reserve to cut interest rates. The hopes had led US share prices to close higher on Wednesday, reversing falls seen earlier in the day.
European shares fell on Wednesday reflecting concerns that the European Central Bank would not make similar cuts.
On Thursday, Japan's benchmark Nikkei index was up more than 2% in early trading, although those gains later slipped back to 1.6%.
Strengthening bondsStrengthening bonds
Other leading Asian markets were also bolstered by optimism that a rescue plan for American bond insurers may be in the offing. Optimism that a rescue plan for US bond insurers may be in the offing boosted shares across Asia.
The plan would bail out bond insurers, which lie at the heart of the financial system, guaranteeing about $2 trillion of assets.The plan would bail out bond insurers, which lie at the heart of the financial system, guaranteeing about $2 trillion of assets.
All three US stock market indexes erased deep losses on Wednesday to end strongly ahead. The Dow Jones rose 2.5% at 12,270.17, while the Nasdaq turned around a 4% decline. All three US stock market indexes erased deep losses on Wednesday to end ahead. The Dow Jones ended up 2.5% at 12,270.17, the Nasdaq turned around a 4% decline to close up 1% and Standard & Poor's 500 Index rose 2.14% to 1,338.60.
The Standard & Poor's 500 Index added 2.14% to 1,338.60. You do have to rescue markets otherwise you would go into a depression, as you did in the 1930s George Soros class="" href="/1/hi/business/7205928.stm">Chill on Wall Street
Panic had swept through stock markets worldwide earlier this week on fears that key global economies will enter recession.Panic had swept through stock markets worldwide earlier this week on fears that key global economies will enter recession.
On Tuesday, the US Federal Reserve made its biggest rate cut for 25 years to stoke up growth and bolster markets. On Tuesday, the US Federal Reserve made its biggest rate cut for 25 years - cutting its main interest rate to 3.5% from 4.25% - to try to lift growth and bolster markets.
However, worries persisted that the move may have come too late, as many firms have already reported lower profits and a worsening business environment.However, worries persisted that the move may have come too late, as many firms have already reported lower profits and a worsening business environment.
Fragile marketsFragile markets
News of the US government plan to inject capital into bond insurers gave fragile confidence in the financial sector a boost and sent shares in banks, including Citigroup and JP Morgan surging, while technology firms also gained.
You do have to rescue markets otherwise you would go into a depression, as you did in the 1930s George Soros Chill on Wall Street
The technology-heavy Nasdaq rose 1%, while the wider S&P 500 index also ended ahead, up 2.1%.
On Tuesday, the European Central Bank hinted it would not follow the Fed by slashing rates, and analysts said the Bank of England was unlikely to accelerate rate cuts.On Tuesday, the European Central Bank hinted it would not follow the Fed by slashing rates, and analysts said the Bank of England was unlikely to accelerate rate cuts.
Speaking to the BBC, billionaire investor George Soros said it was going to be difficult for the UK and US to avoid a recession, even after the Fed cut its main interest rate to 3.5% from 4.25%. Speaking to the BBC, billionaire investor George Soros said it was going to be difficult for the UK and US to avoid a recession, even after the Fed's dramatic rate cut.
Mr Soros said he supported the US Federal Reserve's surprise interest rate cut, which bolstered global stock indexes. 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.
Market moversMarket movers
The UK's FTSE 100 index finished a nerve-wracking session 131 points, or 2.2%, lower at 5,609.3, erasing the gains it made on Tuesday. On Wednesday, the UK's FTSE 100 index finished a nerve-wracking session 131 points, or 2.2%, lower at 5,609.3, erasing the gains it made on Tuesday.
Germany's Dax lost 4.9% at 6,439.21, while France's Cac 40 was down 4.3% at 4,636.76. Germany's Dax fell 4.9% to 6,439.21, while France's Cac 40 was down 4.3% at 4,636.76.
So far this year, the FTSE 100 has lost more than 13% of its value, wiping about £225bn off the total value of the companies listed on the index.So far this year, the FTSE 100 has lost more than 13% of its value, wiping about £225bn off the total value of the companies listed on the index.
Germany Dax's index has been one of the worst hit in Europe, down almost 20% this year.Germany Dax's index has been one of the worst hit in Europe, down almost 20% this year.