World stock markets are soaring Friday on news the U.S. government is formulating a plan to rescue banks from the bad debts at the center of the U.S. financial crisis.
Investors were also encouraged when U.S. regulators temporarily protected the stocks of financial companies from a trading practice called "short selling" that rewards investors when the stock falls. And the government extended insurance protection to widely-held investments called "money market mutual funds."
U.S. stocks surged as trading opened, with some indexes gaining more than four percent.
Tokyo's Nikkei index gained nearly four percent, while Hong Kong's Hang Seng index earned more than 9.5 percent. China's Shanghai index also closed more than nine percent higher, after the government lifted a tax on purchasing shares.
Share prices are also dramatically higher across Europe, with Russian markets reopening after being closed two days. Russian trading was briefly suspended after stocks rose too sharply at the start of Friday's session.
U.S. Treasury Secretary Henry Paulson revealed officials were discussing legislation to deal with "the systemic risk and stresses" late Thursday after meeting with House Speaker Nancy Pelosi and other high-ranking officials and lawmakers.
Senate Majority Leader Harry Reid said he expects the Bush administration will send a proposal to lawmakers soon.
Fears of a global financial meltdown forced the U.S. Federal Reserve and other major central banks early Thursday to pump hundreds of billions of dollars into the world's financial markets.
The banks hoped the move would help restore the confidence of investors.
U.S. stock market indexes soared about four percent late Thursday following reports of the government's plans.
It was the biggest one-day percentage gain for the indexes in six years and nearly recovered the steep losses of the previous day.
Earlier this week, the Federal Reserve gave an 85-billion-dollar emergency loan to bail out the world's biggest insurance company, American International Group (AIG). AIG nearly collapsed after major losses in the housing crisis.
Some information for this report was provided by AFP, AP and Reuters.
