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WASHINGTON: The economic team of US president-elect Barack Obama came into view Friday as fears mounted on the global financial crisis and more mass job cuts loomed worldwide.
Reports said Obama was set to appoint New York Federal Reserve chief Timothy Geithner as his Treasury secretary to take charge of fixing the ailing economy.
The news sparked a massive rally on Wall Street as it instilled confidence that the new administration would move quickly on the crisis, capping another tumultuous day for global markets that also saw heavy losses in Europe.
The Dow Jones Industrial Average vaulted 6.54 per cent to close at 8,046.42, ending the week on a positive note.
"The pick of Geithner indicates that the new Obama administration is taking steps to calm markets by eliminating uncertainty in naming his future economic team prior to January 20," said Andrew Busch at BMO Capital Markets.
US markets had been wobbling after two days of brutal selling that erased some 10 per cent from the main indexes, but got a late boost from reports on the new economic team in Washington.
Obama was to personally unveil Geithner as the incoming Treasury boss at a news conference on Monday, along with New Mexico Governor Bill Richardson as commerce secretary and other members of his economic team, NBC News said.
"This is exactly what I had been calling for and had an immediate positive impact," Busch said.
"Clearly, the incoming Obama administration wants a continuation of the aggressive polices and programs that are in place to deal with the credit crisis."
Meanwhile the economic news from around the world remained downbeat.
In Lima, Chinese President Hu Jintao warned the outlook for the world economy was not looking good, but that continued strong growth in China could help serve as a global buffer.
"The situation is very grim," Hu told world business leaders gathered in the Peruvian capital ahead of an Asia-Pacific economic summit.
"The sound and steady growth of the (Asia-Pacific) economy is threatened by the grim world economic situation."
Hu stressed that China's main contribution to world efforts to address the global financial crisis was to maintain steady economic growth at home.
US President George W. Bush at the summit echoed the anti-protectionist tone as he arrived in Lima under the backdrop of gloom in the world economy - a situation which many critics cite as leading directly from Bush's own economic policies.
"Together, our nations must focus our efforts on three great forces that drive (regional) growth - free markets, free trade and free people," Bush said.
The White House had assailed the US Congress for putting off a vote on whether to bail out the struggling US auto industry, blasting Democrats for "mindless opposition."
Democrats in the US Congress put off a vote on a US$25 billion bailout for the "Big Three" auto manufacturers until at least December and ordered them to come up with a new restructuring plan.
Yves Smith, analyst with the financial website Naked Capitalism, said a collapse of General Motors would be "a disaster of colossal proportions."
"GM would be a massive bankruptcy. It is doubtful whether it could obtain enough (debtor) financing, which means it might be forced into a partial, perhaps a full liquidation. The ramifications are nightmarish."
Indian Commerce Secretary GK Pillai told reporters in New Delhi that the textile industry, the country's second-largest foreign exchange earner, will lose half a million jobs by April 2009 due to the financial crisis.
The sector is estimated to employ around 38 million workers and accounts for about eight per cent of the gross domestic product of Asia's third-largest economy.
Other governments were working to protect industries, as the head of Ford Germany said the European Union should make around 40 billion euros (US$50 billion) in loans available to the continent's ailing auto sector.
Hypo Real Estate, Germany's biggest financial crisis casualty to date, said it has been given more help from Berlin with 20 billion euros (US$25 billion) in loan guarantees.
In Europe, the London FTSE 100 index of leading shares fell 2.43 per cent to 3,780.96 - its lowest closing level since April 3, 2003, capping an overall fall of 10.68 per cent for the week.
In Paris, the CAC 40 plunged 3.33 per cent to 2,881.26 and in Frankfurt the DAX shed 2.20 per cent to 4,127.41.
With the news of Obama's potential economic team the Nasdaq composite climbed 5.18 per cent to 1,384.35 and the Standard & Poor's 500 index jumped 6.32 per cent to 800.03.
In Latin American, Sao Paulo main Ibovespa index fell 6.45 per cent to 31,250 points, falling for its fifth successive day to finish the week with losses of more than 12 per cent.
- AFP/yb
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