9 Sep 2008

Mortgage bail-out rallies markets

9:55 am on 9 September 2008

Global shares rallied on Monday after the United States government announced it is taking over the Freddie Mac and Fannie Mae mortgage lenders.

Analysts said investors hoped the federal bail-out would prop up the US housing market and ultimately help to end the credit crunch.

On Wall Street, shares added 2% in early trading while key European and Asian indexes were up by at least 3%.

US Treasury Secretary Henry Paulson announced the rescue plan on Sunday, before markets opened.

On Wall Street, the Dow Jones industrial average closed up 290.18 points, or 2.59%, at 11,510.49.

Standard & Poor's 500 Index finished up 25.48 points, or 2.05%, at 1,267.79. The Nasdaq Composite Index was up 13.88 points, or 0.62%, at 2,269.76.

Trading volume was light on the New York Stock Exchange: about 1.66 billion shares changed hands, below last year's estimated daily average of roughly 1.90 billion.

About 2.57 billion shares were traded on the Nasdaq, above last year's daily average of 2.17 billion.

In London, FTSE 100 index was 3.8% ahead before a technical glitch brought trading to a halt. It had lost 7% last week.

Germany's Dax-30 index was 3.3% ahead and France's Cac-40 added 4.6%. Zurich's SMI climbed 2.9%.

Earlier in Japan, the Nikkei index closed up 3.4% and the Hang Seng index added 4%.

Indexes in Singapore, Australia and Taiwan were also higher.