Wall Street launched a massive rebound yesterday, muscling the Dow Jones Industrial Average up nearly 553 points after driving it down near its lows for the year, as investors decided they did not want to miss out on cheap stocks.

The New York Stock Exchange's Dow Jones Industrial Average fell by more than 300 points soon after George Soros, chairman of Soros Fund Management, testified at a US House of Representatives Oversight and Government Reform Committee hearing.

The Dow later ended 552.59 points up at 8835.25.

Soros, who profited handsomely from the pound's exit from the European Exchange Rate Mechanism in the early 1990s, told the committee that "a deep recession is now inevitable and the possibility of a depression cannot be ruled out".

He also said hedge funds were an integral part of the financial market bubble that now has burst, adding that such investment vehicles will be "decimated" by the current financial crisis and forced to shrink their portfolios by 50%-75%.

Meanwhile, traders appeared to take in their stride a government report showing a larger-than-expected jump in unemployment claims.

The Labour Department said the number of newly laid-off individuals seeking unemployment benefits has jumped to a level not seen since just after the terrorist attacks on September 11, 2001, In London, the FTSE-100 index closed down 12.81 points at 4169.21 but Germany's DAX was 28.72 points higher at 4649.52 despite confirmation that Europe's biggest econ-omy is officially in recession. The CAC-40 in France was up 28.72 points at 3269.46.

Shares in British lenders were among the worst losers, amid mounting worries that the UK economy faces tough times ahead.

BP, Europe's second-largest oil company, and mining company BHP Billiton also fell on concern that a global recession would dampen demand for commodities.

With corporate news consistently coming in worse than anticipated, some speculators remain wary of piling into stocks too heavily. Others, however, lured by many stocks at bargain basement prices, are dipping in and out of the market.

Global share markets have faced considerable selling pressure this week, stoked by a run of bleak US corporate news from General Motors, electronics retailer Circuit City Stores and department store chain Macy's. In addition, investors reacted nervously to the announcement on Wednesday from US Treasury Secretary Henry Paulson that the original $700bn financial rescue package will not be used to purchase troubled assets from banks. The treasury will instead rely on buying stakes in banks and providing more direct help to consumer debt markets.

Earlier Japan's benchmark Nikkei 225 stock average fell 5.3% and Hong Kong's Hang Seng index dived 5.2%.

The Shanghai Composite Index bucked the regional trend, jumping 3.7% as the Chinese government's $586bn economic stimulus package announced on Sunday continued to underpin sentiment.

Stephen Roach, chairman of Morgan Stanley Asia, said China's stock market, where the key index has fallen by about two-thirds since its peak last October, may rebound next year if the country can maintain a high growth rate.

In the credit markets, the London interbank offered rate, or Libor, that banks say they charge each other for three-month loans in dollars, rose for the first time in 24 days.

The rate increased almost two basis points to 2.15%, according to British Bankers' Association data. The overnight rate also climbed two basis points, to 0.40%, still 60 basis points below the Federal Reserve's target rate.

Three-month sterling rates were fixed at 4.20% against the previous rate of 4.31%.