The US government has hatched a plan to rescue banks from the financial crisis, sending stocks soaring.
United States Treasury secretary Henry Paulson and Federal Reserve chairman Ben Bernanke told reporters they plan to work through the weekend with Congress on a plan to rid the banking system of the bad debts that are creating turmoil.
Shares on the Dow Jones industrial average rallied on hopes the talks would lead to a permanent fix to the crisis on Wall Street, jumping around four per cent to 11,019.70.
The news helped boost shares in Morgan Stanley, which is said to be in talks with potential rescuers, by 3.68 per cent.
It is thought the solution could be based on the Resolution Trust Corporation model, a government agency created as a response to the savings-and-loans crisis in the 1980s.
The agency took on bad debt from failing savings groups and liquidated the assets, restoring confidence in the market.
Earlier yesterday the Federal Reserve led a global effort to prop up the markets with a $180 billion (£99 billion) cash injection to the credit markets.
However, the action was seen as a short-term fix for the problems and stock markets on both sides of the Atlantic only rallied briefly before sliding again.
Digg 
Delicious 
Reddit 
StumbleUpon 
Google 
Technorati 
Netvouz