The U.S. Treasury will inject capital by buying preference shares and also offer guarantees on some forms of new bank debt for up to three years.
European investors had anticipated the welcome news, with FTSE 100 up 5.04% at 4,471.54 by midafternoon Tuesday in London and Germany's DAX index up 5.4% at 5,334.05.
In New York investors were bullish though Monday's euphoria was tamed, with the Dow Jones Industrial Average up 1.6% in morning trading.
A hopeful sign for critical credit markets: The gap between three-month dollar denominated LIBOR and three-month U.S. Treasury bills narrowed to about 422 basis points early on Tuesday in New York, from about 459 basis points late on Friday. That was nearly the widest gap in a decade. - Laura Board
