The US dollar rose and European stocks soared on Friday, propelled by huge gains in banking stocks as the United States government considered a plan to deal with toxic bank assets.
US Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke intend to work through the weekend on a plan to deal with mortgage-related assets that are choking the financial system.
Stocks on European markets soared, with Barclays, which is buying some of the assets of the collapsed US investment bank Lehman Brothers, up as much as 39%.
Shares in HBOS climbed 39% and its new owner Lloyds TSB rallied 26.1%.
"At present, confidence is the most important factor and this will only be maintained if the rescue plans are delivered on both sides of the Atlantic," said Andrew Turnbull, senior sales manager at ODL Securities.
UK banking shares also got a boost after UK regulators slapped a temporary ban on short selling of banking stocks.
By 0849 GMT on Friday, the FTSEurofirst 300 index of top European shares was up 6% at 1,127.58 points, recouping some of the sharp losses from earlier in the week. The benchmark was still down about 3.5% for the week and has fallen 26% so far in 2008.
The US dollar rallied more than 1% against the euro to $1.4169 and nearly 2% against the yen to 107.68.
Gold dropped over 2% to $831.25 on the firm dollar, but US crude oil futures rose as much as $2 on growing US and Nigerian supply concerns before easing to $99.11 a barrel.
On Thursday, the Dow Jones industrial average closed up 410.03 points, or 3.86%, at 11,019.69. The Standard & Poor's 500 Index rose 49.91 points, or 4.32%, at 1,206.30. The Nasdaq Composite Index jumped 100.25 points, or 4.78%, at 2,199.10.
For all three indexes it was the biggest one-day percentage gain since October 2002, when the last bull market was born.
On Thursday and Friday, central banks from the UK, US, Europe, Canada, Switzerland and Japan released $US180 billion into their money markets. The move is the fourth such concerted effort since the onset of the credit crisis last year.
Japan's Nikkei share average rose 3.8% on Friday, rebounding from a three-year closing low hit on Thursday.
Britain's top share index rallied 6.5% in early trading to snap a four-day losing run.
United Nations' concern
The United Nations secretary general Ban Ki-Moon says the financial turmoil in the Unied States may affect the UN's ability to reduce hunger and poverty worldwide.
The UN has set itself Millenium Development Goals that include halving hunger and poverty by 2015.
But the global food crisis, and the unfolding events on Wall Street and elsewhere are threatening progress.
Mr Ban has called a meeting of world leaders to discuss the issue next week at the UN General Assembly.
