Stock prices in Asia and Australia have soared in response to a United States government plan to rescue mortgage giants Freddie Mac and Fannie Mae. Economists think the decision to take control of the troubled companies will ease global financial market worries by stabilizing the U.S. housing market. From Sydney, Phil Mercer reports.

Investors were heartened by the U.S. government's decision to take over ailing mortgage companies Freddie Mac and Fannie Mae and to inject billions of dollars into them.

Australia's benchmark ASX 200 index finished nearly four percent higher Monday, with banks leading the way as the market enjoyed its biggest one day gain in six months.

Other markets around Asia soared even higher, with the main indexes in Seoul and Taipei both up more than five percent and the Hang Seng in Hong Kong gaining more than four percent. Japan's Nikkei index rose over three percent.

The announcement from the United States particularly boosted the previously depressed banking stocks, with Commonwealth Bank of Australia up around six percent while National Australia Bank was almost eight percent higher.

Economist Savanth Sebastian says the share market is benefiting from some rare good news.

"A sharp turn around, similar to what we saw with Bear Stearns earlier on in this year when JP Morgan took them over," said Sebastian.  "We're seeing significant gains for the banking sector, diversified financial stocks also seeing strong gains.  If you just have a look across the board there's a sea of green: ANZ is up 6.5 percent; you've got Westpac up four percent.  So a sharp turn around for stocks and it's really a reprieve from the fear-driven environment that we have seen over the last couple of months."

Monday's gains in Asia follow a gloomy trading session Friday when concerns about the U.S. economy and its effects on global growth sent markets tumbling across the region.

Despite the optimism, some Australian economists sound a note of caution and say the worst of the international credit crisis is far from over.