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Global share rebound continues Worldwide share jitters continue
(about 2 hours later)
Global stocks have risen on optimism that the White House and the Federal Reserve will steer the world's largest economy out of a recession. Global stocks were mixed on Friday, ending two straight days of solid rises as concerns returned about the state of the worldwide financial sector.
A US plan to spend $150bn (£76bn) reviving its economy helped to send all three US stock indexes higher, with the benchmark Dow Jones up 0.5%. While the main US share indexes fluctuated between small rises and falls in lunchtime trading on Wall Street, European stocks ended lower.
Strong earnings from Microsoft and building equipment firm Caterpillar helped to lift sentiment. London's FSTE closed down 6.8 points to 5,869, while Frankfurt's Dax lost 4.3 points and Paris' Cac fell 37 points.
The UK's FTSE 100 rose 0.4% while Germany's Dax index added 1.6%. Analysts said sentiment was hit by reports a hedge fund was in trouble.
The positive trend marks a stunning turnaround from the feeling at the beginning of the week. America's main Dow Jones index was up just six points by noon in New York.
Reports said that one of the main US hedge funds was in financial difficulty, but no names have been suggested.
US economic plan
Global stocks had risen earlier on Friday as investors welcomed the previous day's announcement of a US government plan to spend $150bn (£76bn) reviving the country's economy.
We expect sharp gains and losses in the next few days and weeks Heinz-Gerd Sonnenschein, a strategist at Postbank
Strong earnings from Microsoft and building equipment firm Caterpillar had also helped to lift the mood, with Japan's main Nikkei index closing up 4%.
On Monday, stock markets from Japan to the UK were heavily sold on growing fears that the US would fall into a recession and drag down other key economies too.On Monday, stock markets from Japan to the UK were heavily sold on growing fears that the US would fall into a recession and drag down other key economies too.
The US has done many things to stabilise the market but all the bad news is not yet out there Heinz-Gerd Sonnenschein, Postbank In many markets, the falls were the worst since the 11 September 2001 attacks on the US.
In many markets, the falls were the worst since the 11 September 2001 attacks on the US. The resulting turmoil prompted the Fed, the US central bank, to cut US rates to 3.5% from 4.25%. The resulting turmoil prompted the Fed, the US central bank, to cut US rates to 3.5% from 4.25%.
This failed to prompt a rebound by itself, with many observers taking the view that the Fed's bold move had come too late. Analysts now expect more volatility in the short term.
But after the speedy implementation of the White House economic measures and talks of a rescue plan for bond insurers, which are at the heart of the whole financial system, the outcome was an end-of-week rally.
The Dow Jones gained 0.5% to reach 12,440, while the technology-heavy Nasdaq and S&P also rose.
Earlier, Asian stocks made larger gains, with Japan's Nikkei 225 closing up 4%.
The discovery of a massive fraud at French bank Societe General was largely ignored and confidence in banks worldwide appeared to be unaffected.
Market moves
London's FTSE 100 rose 22.90 points, 0.4%, to trade at 5, 898.7 in late London trade, tracking back earlier gains of more than 1.6% but still making a full recovery from the steep losses it suffered on Monday and Tuesday.
Germany's benchmark Dax index rose 1.6% to 6,933.68, while in France, the Cac 40 climbed 0.2% to 4,925.
Analysts expected more volatility in the short term.
"We expect sharp gains and losses in the next few days and weeks," said Heinz-Gerd Sonnenschein, a strategist at Postbank in Germany."We expect sharp gains and losses in the next few days and weeks," said Heinz-Gerd Sonnenschein, a strategist at Postbank in Germany.
"The US has done many things to stabilise the market, but all the bad news is not yet out there.""The US has done many things to stabilise the market, but all the bad news is not yet out there."
Stimulus measures
On Thursday, the White House and the Democrats in Congress agreed a package of measures to boost economic growth in the US, where fears of a recession have risen.
This included a tax rebate to some 117 million US homes of up to $600 for individuals and up to $1,200 for married couples.
House of Representatives Speaker Nancy Pelosi said Congress would act on the deal "at the earliest date, so those rebate cheques will be in the mail".
The tax rebates for households should total $100bn, while businesses will benefit from up to $50bn of tax cuts.
"Because the country needs this boost to the economy now, I urge the House and the Senate to enact this economic growth agreement into law as soon as possible," said President George W Bush.
Asia boost
Many Asian economies are still closely tied to US demand for their exports, despite the emergence of China as a major importer.
So fresh hopes that the US consumer will carry on spending lifted shares across the board, from financial firms to carmakers and technology stocks.
The benchmark index in Hong Kong, the Hang Seng, closed up 6.7% at 25,122.37, while Japan's Nikkei 225 rose 4% to end at 13,629.2.
Stock markets in South Korea, Taiwan, the Philippines and Australia also rose.

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