Shares soar on U.S. rescue plan

The FTSE 100 finished 110 points higher at 3,952.81, adding £25billion to the value of London’s battered stock market.

It followed the unveiling of the scheme by President Barack Obama’s government to buy up bad debt.

Stock markets in Europe also rose. The Cac 40 in France finished 2.8 per cent ahead and Germany’s Dax closed up 2.6 per cent.

In America, the Dow Jones finished up 6.84 per cent, its fifth largest rise in history, closing at 7,775.86.

The proposals announced yesterday would see the US government team up with private investors to buy potentially toxic assets from banks in order to get them lending again.

The aim is to create funds using an equal mix of government and private money to buy assets.

These funds will be able to borrow up to six times their capital through US government-guaranteed loans to take potentially bad mortgage and other debts from banks.

Toxic deb where banks have lent cash to people and companies unable pay back the money – are widely blamed for creating the current economic crisis when the sub-prime mortgage market collapsed.

Unveiling the $1,000,000,000,000 scheme, President Obama said he was “very confi dent” the rescue plan would work.

“The good news is that we have one more critical element in our recovery. But we’ve still got a long way to go. It’s not going to happen overnight. But we think that we are moving in the right direction,” he said.

Banking shares were particularly buoyant after the announcement. In London, Barclays shares went up 15 per cent and HSBC rose by more than 12 per cent.

American banking giant Citi- group jumped 14.5 per cent and the Bank of America rose 13.6 per cent.

The news comes as top executives from leading European, US and Asian banks are expected to discuss their risk exposure to lending, regulatory reform and attempts to kick-start the global economy in London today.

But as stocks markets across the world enjoyed a respite from the battering they have taken in recent months, the head of the International Monetary Fund has warned that, if not halted, the global economic crisis could lead to civil unrest and war.

Dominique Strauss-Kahn  yesterday told a meeting of the UN’s International Labour Organisation: “Bluntly, the situation is dire.”

Mr Strauss-Kahn said he feared millions of people in developing countries would be pushed back into poverty which would threaten fragile democracies.

He added: “All this will affect dramatically unemployment and beyond unemployment for many countries it will be at the root of social unrest, some threat to democracy and may be, for some cases, it can also end in war.

He was talking less than two weeks before the G20 summit is due to meet in London on April 2 to discuss how to deal with the current crisis.

G20 finance ministers agreed at a March 14 meeting to use their full fiscal and monetary firepower to combat the worst downturn

since the 1930s.