Global stock markets rallied today on investor optimism that the US Senate would later approve a revised financial rescue package that could prevent fresh economic chaos, dealers said. "There's clearly an air of confidence suggesting that a US rescue package of some shape will be passed and with a vote expected later today in Senate with a broader package being proposed, the optimism may well be justified," said Matt Buckland, a CMC Markets dealer. Stocks rose in Asia and in most European markets after a powerful rally on Wall Street as hopes grew that the new bank bailout plan could also clear Congress this week. Tokyo ended up 0.96 per cent as Sydney soared 4.2 per cent. European markets followed suit, with London gaining 1.45 per cent, Paris up 0.46 per cent and Frankfurt adding 0.10 per cent. Many Asian markets were shut for public holidays, but those that were open took their cue from New York where the Dow Jones index posted its third-largest single-day point gain, a day after its worst loss. The Senate will vote today on a revised US$700 billion (Dh2.5 trillion) Wall Street bailout, after the House of Representatives sparked chaos on financial markets by rejecting an earlier version. "The Senate will vote on a new version of the rescue bill today ... with the hope this will build momentum for passage of the bill in the House on Thursday," added Barclays Capital analyst David Woo. Dealers said the chorus of concern following US lawmakers' rejection of the Treasury's proposed bank bailout had raised hopes that a new package can be approved before the crisis spirals out of control. Wall Street's Dow Jones Industrial Average had leapt 4.68 per cent to close at 10,850.66 yesterday. The package is expected to have a much easier path through the 100-member chamber than it had in the House, where in a shock vote, members rejected it on Monday by 228 votes to 205. "There are expectations that lawmakers will pass a bailout bill by midweek or the government will come up with a new plan," said Kazuhiro Takahashi, equity manager at Daiwa Securities SMBC. "But the markets have not fully recovered amid lingering caution." The Bank of Japan announced just before the opening bell that the nation's business confidence had fallen to the lowest level in five years in September as Asia's largest economy skirts recession. The central bank pumped emergency funds into the short-term money market for an 11th straight business day to try to ease strains on the financial system, making two injections of 800 billion yen. The fear is that if credit flows ? the lifeblood of the global economy ? dry up, then a worldwide recession may follow. "Unless bank funding pressures ease significantly and soon, then global growth expectations will continue to worsen," warned John Kyriakopoulos, a NAB Capital economist in Sydney. Meanwhile, the Bank of England today offered $30bn to banking institutions on a one-week tender. The BoE also offered a further $10bn of loans on an overnight basis to banks hit by the credit crunch. * AFP
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