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Local share market surges -

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ELEANOR HALL: The Australian share market is undergoing its biggest surge in more than a decade.

The All Ordinaries index rocketed more than six percent in early trade, taking its lead from Wall
Street which was up by 11 per cent when it closed this morning.

The renewed optimism comes as central banks in Britain and Europe are offering to provide unlimited
cash injections to thaw credit markets and underwrite banks.

And now word is emerging that the White House is also stepping up its response and preparing to buy
major stakes in nine US banks.

Business editor Peter Ryan has the latest.

WALL STREET TRADER: I'm talking healthcare, I'm talking utilities, I'm talking telecom stocks, lots
of...

PETER RYAN: On Wall Street, there was a stampede as eight days of fear, suspicion and record losses
made way for some traditional greed.

WALL STREET TRADER: ... And what it means, is these stocks were really headed for a big bounce and a
bunch of the major groups, really headed for that bounce and that is what we got today, the big
question of course being, can we sustain it?

PETER RYAN: One big question, so few answers as US stocks staged their biggest rally in seven
decades with the Dow Jones Industrial Average, the S and P 500 and the tech heavy Nasdaq up more
than 11 per cent.

That's the steepest one-day advance since 1939 and that's causing a surge of worry for traders like
Larry Levin.

LARRY LEVIN: It's been such a strong day and so far again we're staying nice and strong and I think
that's the way it's going to stay, but again I think the biggest thing will be seeing some
continuation of this tomorrow.

One day wonders, not what we're looking for, we need a few days of some support here.

PETER RYAN: The big board at the New York Stock Exchange reflected today's optimism that the credit
crisis might be easing.

The troubled investment bank Morgan Stanley rose a staggering 87 per cent after sealing a
$9-billion investment from Japan's Mitsubishi UFJ Group.

And household names including Alcoa, Johnson and Johnson, Chevron and Prudential posted some of
their biggest gains.

The renewed confidence also came as credit markets started to thaw, with the key London interbank
rate or LIBOR shedding 75 basis points.

Market watcher Brian Reynolds says that's a small but significant sign of a turning point in the
crisis.

BRIAN REYNOLDS: We are at a point where now the credit market is dictating the economy and so after
the credit market turns, I think the economy will turn.

We've had clients exit the fixed income and money market arena at a rate that's historic, when they
come back, that's the signal that the bottom is in and that the next bull market can strike. Not
until then.

PETER RYAN: In Europe, share markets rocketed as much as 11 per cent after the European Central
Bank, the Bank of England and the Swiss National Bank offered unlimited cash injections to revive
money markets.

As a result of so much unprecedented action, the Australian share market rose more than six per
cent in early trade.

Joe Youseff is an elated but still wary trader at CMC Markets.

JOE YOUSEFF: Brokers first and foremost and I suppose the investors as well, it's collective sigh
of relief from a much needed respite to the wave and the bombardment of selling last week.

It's clear obviously that there's a lot of nervousness continues to pervade obviously the markets
remain extremely volatile and on a razors-edge and that really hasn't subsided all that much. So
whether or not it's just a short-term respite to the selling or the start of the market bottoming
out and starting to trade more on fundamental valuations, remains to be seen.

PETER RYAN: As a result there's one big warning for investors - watch out for the dead cat bounce.

DAVID DARST: We believe that there's three phases. Phase one was the housing and mortgage problems.
Phase two is the financial system and Wall Street problems and phase three is the US economy and
the global economy.

PETER RYAN: David Darst is chief investment officer at Morgan Stanley.

He says behind today's rally, there's still a painful and unavoidable slowdown ahead.

DAVID DARST: We think there's a slowdown coming, we're looking for negative growth in the fourth
quarter and in the first quarter of the coming year. So we're looking for a recession, a deepening
recession, not necessarily a tremendous depression which is what people were worried about last
week.

Last week it was are we going to fall off the edge of a cliff? We don't think so, we think this is
a classic 1900's, 19th Century style recession, the 1800's in which it was tight credit which
caused the recession.

Rather than the Federal Reserve raising interest rates to quell inflation. That was a 20th century
style recession, so we're basically in a deep recession camp.

PETER RYAN: That reality is now showing up in emerging economies as worried investors pull their
money out of countries such as Brazil, India, China and Russia.

ELEANOR HALL: Business editor Peter Ryan. And shortly we'll bring you details of the Federal
Government's plan to inject $10.4-billion into the Australian economy.