A US government plan to resolve Wall Street’s financial crisis has prompted a surge in shares.
The Dow Jones Industrial Average soared more than 400 points when US Treasury Secretary Henry Paulson proposed the creation of a fund that would mop up so called toxic debt.
Paulson and Federal Reserve Chairman Ben Bernanke proffered the deal to Congressional leaders at a hastily convened meeting.
It would see the creation of an entity to buy up troubled real estate debt to get credit markets working again.
Financial analysts believe it could be the solution world markets have been waiting for.
Sam Stovall, Chief Investment Strategist at Standard and Poor’s said: “I think investors should see this news as a continuation of the government’s attempt to resolve this crisis of confidence.
“I think that for the average person on main street the worry is that things have gotten out of hand and that possibly we need some leadership to help us figure out that soon we can come to a resolution with this”.
In another move aimed at resurrecting the markets the Treasury appointed British Financial Services Authority said it would bar investors from betting on price declines, amid growing signs of a backlash against those who do.