US stocks rose on Thursday as a report that major US investment bank Lehman Brothers is shopping itself to possible suitors, including Bank of America, drove a last-minute rebound in financial shares.
A retreat in the price of oil also boosted the market, easing concern about consumer and business spending and sending airline and retail shares higher.
General Motors was another standout, with shares rising more than 11% on hopes that Washington may provide a financial lifeline for US automakers. Ford jumped nearly 5% a share to $US4.68.
Financial shares rallied after The Wall Street Journal reported that Lehman was courting suitors, including Bank of America.
That sector had been under steady pressure on fears that Lehman would not be able to raise much-needed capital to cover mortgage-related losses.
Lehman shares ended down nearly 42% at $US4.22. Investor fears that Lehman would fail to raise enough capital to cover its mortgage-related losses have kept it under steady pressure all week.
The Dow Jones industrial average ended up 164.79 points, or 1.46%, at 11,433.71. The Standard & Poor's 500 Index closed up 17.01 points, or 1.38%, at 1,249.05. The Nasdaq Composite Index finished up 29.52 points, or 1.32%, at 2,258.22.