27 Sep 2008

Wall St rally in anticipation of rescue deal

5:52 pm on 27 September 2008

US shares finished the week mainly higher in a volatile session as traders opted for buying ahead of the weekend in anticipation of a deal in Washington on a massive financial rescue plan.

After a sharply weaker opening, the Dow Jones Industrial Average reversed course and was up a hefty 138.83 points or 1.26% at 11,160.89, at the closing bell.

The tech-heavy Nasdaq lost a modest 3.23 points or 0.15%and the broad-market Standard & Poor's 500 index rose 6.23 points (0.52%) to a preliminary close of 1,215.41.

The market focused on wrangling in Washington over a proposed $US700 billion plan to help shore up the banking sector drowning in mortgage losses.

Hopes for a deal had faded late on Thursday but were revived on Friday as President George Bush urged support for the plan.

Analysts said there was "no particular news item" that prompted the late-day rally.

But they added that "the growing consensus is that a federal asset funding plan will be approved".

US dollar falls

Gold jumped 4% and the dollar fell 1.6% against the yen, the strongest currency performer across the board, as investors piled into safe assets.

Central banks injected fresh liquidity into the global banking system, helping lower soaring inter-bank borrowing rates.

Oil slipped to about $US105 a barrel.