U.S. stocks come charging back as governments throw trillions at banks
Dow Jones industrials show best single-day point gain in history
U.S. stock indexes closed up more than 11 per cent Monday as governments around the world committed trillions to easing the global credit freeze.
The Dow Jones industrial average was up more than 936.42 points, or 11.1 per cent, at 9,387.61
It was the Dow's biggest single-day point gain yet, a stunning turnaround after its worst week on record. The blue-chip index recovered nearly half of the 1,874 points it lost last week.
The Nasdaq composite closed up 11.8 per cent and the S&P 500 advanced 11.6 per cent.
Canadian markets were closed Monday for Thanksgiving.
The U.S. markets were responding to injections of billions of taxpayer dollars, pounds and euros into the Western world's leading banks.
European governments — Britain, Germany, France, Spain, the Netherlands, Austria and Portugal — have committed up to $2.3 trillion to support banks.
The British government said Monday it will inject nearly $75 billion into three of the country's largest banks to prevent the institutions from collapsing. The move means the government is effectively taking over the Royal Bank of Scotland and will also hold a large share of Lloyds/TSB and the Halifax Bank of Scotland, Prime Minister Gordon Brown said.
A German government spokesman said Monday that Berlin had put together a package worth $780 billion to provide fresh capital for banks, guarantee loans between banks and cover potential losses.
In the U.S., the government is working on its $700-billion US financial rescue plan, consulting with six private law firms to determine the best way to buy stakes in a number of banks.
The plan to buy shares, announced by Treasury Secretary Henry Paulson late Friday, is intended to get capital quickly into financial institutions. It's seen as a faster way to do that than the original plan, which involved buying bad mortgage-related derivatives.
The European countries and the U.S. are trying to get capital into banks quickly so they will start lending again, providing credit to people and companies on which the economy depends. The freeze in lending, the result of banks' fears that they won't be repaid, could tip the Western economies — and the world — into a recession.
Stock prices also rebounded in Europe and Asia on Monday after a week that saw huge losses on markets all over the world.
Hong Kong's Hang Seng index jumped 10.2 per cent Monday. Britain's FTSE 100 was up 8.3 per cent, Germany's DAX 11.4 per cent and France's CAC-40 11.2 per cent.
Japanese markets were closed for a holiday.
With files from the Associated Press