Markets have been on a white-knuckle ride this week
Leading US shares have surged, boosted by a report that the US government might announce a new plan that would help tackle the financial crisis.
Treasury Secretary Henry Paulson was looking to create a repository for bad bank debt, CNBC reported.
The leading Dow Jones Industrial Average added more than 400 points, or 3.86%, to 11,019.69, a rise of 560 points from its low of the day.
Japan's Nikkei echoed the rally with a 1.24% rise at Friday's opening.
World markets have been volatile in the wake of huge upheavals among banks.
Since the start of the week, Lehman Brothers has collapsed, the Federal Reserve has bailed out insurance giant AIG, Merrill Lynch has been acquired by Bank of America and in the UK, Lloyds TSB has acquired HBOS.
US investors were boosted on Thursday by the hope of a broad-reaching federal intervention that might lead to the creation of an entity to take on the bad debt that has hit finance firms.
Only a day earlier the Dow Jones index had fallen by more than 4%.
CNBC said that Mr Paulson was looking into setting up something akin to the Resolution Trust Corp, which was formed after savings and loans banks collapsed in the 1980s.
Mr Paulson and Federal Reserve Chairman Ben Bernanke are to meet congressional leaders late on Thursday to discuss ways out of the crisis, congressional sources said.
The past few days have seen a number of dramatic developments on financial markets. Thursday's key events include:
Central banks from the UK, US, Europe, Canada, Switzerland and Japan are releasing $180bn into their money markets. The move is the fourth such concerted effort since the onset of the credit crisis last year.
The news helped to reduce the interest rate at which banks lend to each other - a key factor behind the problems in credit markets.
Cautious investors are looking for safer places to put their money. The price of gold, regarded as a haven in troubled times, rose to $871.2 an ounce after recording its biggest one-day gain in history on Wednesday.
Lloyds TSB released details of its £12.2bn takeover of HBOS. The deal values HBOS shares at 232p each and is expected to lead to cost savings of £1bn a year and could also result in significant job losses.
Russia's main stock exchange suspended trading for a second consecutive day as the government tried to halt a sharp fall in share prices and restore confidence in the economy.
The UK's Financial Services Authority has announced steps to restrict short-selling of shares while New York's attorney general has launched a probe into short-selling.
Earlier on Thursday, European markets had been mixed.
The Paris Cac shed 1.06% to end at 3957.86 and London's FTSE 100 ended 0.6% lower at 4880. In Frankfurt, the Dax closed 0.04% up, at 5863.42.
Bush seeks to reassure markets
US President George W Bush said he was closely monitoring the situation on financial markets and the recent actions taken by the Federal Reserve and other regulators were "necessary and important".
"We will continue to act to strengthen and stabilise our financial markets and improve investor confidence," he said.
Banks take action
Earlier on Thursday six of the world's top central banks took steps to calm worried stock markets, releasing $180bn (£99bn) to lift the amount of credit available.
The credit crunch is creating a new world order in banking and finance
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