Wall Street rallies

US traders shrugged off predictions of recession overnight, Australian time, to stage a strong rally.

The Dow Jones industrial index rose 189.2 points, to close at 12,570.22.

That happened after a new report showed home sales in the US stronger than the market had expected.

Traders were also encouraged by the news that the ratings agency Standard and Poors had confirmed its Triple-A rating for MBIA inc. and the Ambac Financial Group.

This eased earlier fears about the future of troubled bond insurers.

MBIA shares rose by more than 16 per cent on the news, while Ambac shares jumped by more than 10 per cent.

European share markets also gained ground overnight, as financial stocks generally rose.

Asian markets also recorded strong results.

However analysts warned that the volatility seen in recent weeks is likely to continue for some time yet.

They said that the forces, which set off that unrest, are still strong.

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