Shares rise ahead of key US vote

Global shares have risen on cautious optimism that a revised version of the $700bn (£380bn) US banking rescue plan will be approved by US politicians.

With the US Senate due to vote on the new plan later on Wednesday, hopes are growing that enough changes have been made to get the bill passed.

The UK's benchmark FTSE 100 share index was up 0.9% in morning trading.

UK stocks were also lifted by news the Bank of England is to pump a further $30bn (£17bn) into the money markets.

'Optimism'

As hopes grow that the latest US rescue plan will get voted through, the markets have reacted as follows:

The FTSE 100 was up 43 points or 0.9% at 4,946
France's Cac 40 had added five points or 0.13% at 4,037
Germany's Dax was down 10 points or 0.17% to 5,821, after it was dragged lower by carmaker Daimler falling 4.% on speculation it may issue a profits warning
Earlier on Wednesday, Japan's Nikkei index had ended up 1% while Australia's main index closed up 4%
On Tuesday, the Dow Jones index of top US shares closed up 4.7%
Banks Lloyds TSB and HBOS are the biggest risers on the FTSE 100, up 8.5% and 7.3% respectively. It came after Prime Minister Gordon Brown said he was confident Lloyds TSB's takeover of HBOS will go ahead
"There's clearly an air of confidence suggesting that a US rescue package of some shape will be passed," said global share brokerage CMC Markets.

"And with a vote expected later today in the Senate with a broader package being proposed, the optimism may well be justified."

Political momentum

The new US package is broadly similar to the first, but includes new measures to help gain Congress's backing.

One of the new clauses will raise the government's guarantee on savings from $100,000 (£56,000) to $250,000.

To get through the Senate, the bill will require the backing by 60 of the 100 senators.

However, it will then have to return to the House of Representatives on Thursday, which rejected the first version of the $700bn rescue plan on Monday.

The BBC's Jonathan Beale, in Washington, says a positive vote in the Senate is likely to give the bill momentum when it goes back to the House.

'Responsible bill'

Presidential candidates John McCain and Barack Obama, who both support Mr Bush's efforts to bail out the economy, say they will return from campaigning to vote in the Senate.

And senior Democrats have pledged to find a bipartisan solution.

"Working together, we are confident we will pass a responsible bill in the very near future," Senator Harry Reid and House of Representatives Speaker Nancy Pelosi wrote to President George W Bush.

However, some members of Congress continue to press for more fundamental changes, such as insurance for bad loans, rather than the removal of the loans from the books of financial companies, says the BBC's Americas editor Justin Webb.

Earlier President Bush had warned of "painful and lasting" consequences for the US should Congress fail to agree a rescue plan.

Analysts say the Senate is more likely to pass the bill because senators are not facing the same pressure from voters - who are generally opposed to the bailout - as members of the House.

All representatives face re-election in November compared with only one-third of senators.