Recovery on Wall Street continues

Stock markets have started to regain ground

Shares on Wall Street closed higher with investors encouraged by the White House and Congress agreeing a $150bn (£76bn) economic stimulus plan.

With 117 million US homes set to get a tax rebate, both politicians and the markets hope it will lift consumer spending and ease recession fears.

The main Dow Jones index ended up 108 points to 12,379, while the Nasdaq added 45 points to 2,361.

In Europe, London's FTSE 100 rose 4.75%, while Frankfurt's Dax added 6%.

Continuing market fears

US investor sentiment was further lifted by hopes of a rescue package for US bond insurers that could prevent a new wave of asset writedowns.

You do have to rescue markets, otherwise you would go into a depression, as you did in the 1930s George Soros Chill on Wall Street Send us your comments

This plan would bail out bond insurers, which lie at the heart of the financial system, guaranteeing about $2 trillion of assets.

Panic had swept through stock markets worldwide earlier this week as fears that key global economies would enter recession sparked sharp share falls.

On Tuesday, the US Federal Reserve responding by making its biggest rate cut for 25 years - slashing its main interest rate to 3.5% from 4.25% - to try to lift growth and bolster markets.

However, worries persisted that the move might have come too late, as many firms have already reported lower profits and a worsening business environment.

Earlier this week, billionaire investor George Soros told the BBC it was going to be difficult for the UK and US to avoid a recession, even after the Fed's dramatic rate cut.

But Mr Soros said he supported the Fed's move.

"You do have to rescue markets, otherwise you would go into a depression, as you did in the 1930s," he said.