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US rescue plan sparks Asian rally European and Asian shares surge
(about 1 hour later)
Asian share indexes bounced back on Thursday, boosted by an earlier rally on Wall Street. Stocks across Europe and Asia have rebounded, following strong gains for US stocks on Wednesday.
Japan's benchmark Nikkei index closed 2.1% higher, while key share indexes climbed by more than 2% in Mumbai, Hong Kong and Sydney. By 0820 GMT, London's FTSE 100 index was up 3.1%, in Paris the Cac 40 rose 4.5% and Frankfurt's Dax was up 3.1%.
In Asia, 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 on hopes of a rescue plan for US bond insurers that could prevent a new wave of asset writedowns.The rebound came on hopes of a rescue plan for US bond insurers that could prevent a new wave of asset writedowns.
The hopes had led US share prices to close higher on Wednesday, reversing falls seen earlier in the day.The hopes had led US share prices to close higher on Wednesday, reversing falls seen earlier in the day.
Strengthening bondsStrengthening bonds
Optimism that a rescue plan for US bond insurers may be in the offing boosted shares across Asia.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 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.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.
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 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
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 - cutting its main interest rate to 3.5% from 4.25% - to try to lift growth and bolster markets. 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.
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 might have come too late, as many firms have already reported lower profits and a worsening business environment.
Fragile marketsFragile markets
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 cutting 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's dramatic rate cut.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 Fed's move.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 movers
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 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.
Germany Dax's index has been one of the worst hit in Europe, down almost 20% this year.