The US President George W Bush is warning of "severe consequences" for the American economy if a massive financial bailout plan isn't passed.

Our Washington correspondent, Kim Landers, reports the White House and Congressional leaders are now scrambling to work on a new massive rescue deal for the American financial system.

President George W Bush is also trying to change the minds of US politicians who voted against it yesterday.

"We're at a critical moment for our economy and we need legislation that decisively addresses the troubled assets now clogging the financial system and allows the American economy to get moving again."

Both Presidential candidates Barack Obama and John McCain have phoned George W Bush to express their support for a deal.

Stocks rebound
US stocks have rebounded from Tuesday's worst sell off in more than 20 years.

The Dow Jones Index jumped 485-points or 4.7 per cent to end at 10,851.

The tech-heavy Nasdaq and the Standard and Poor's 500 gained about five per cent.

Europe stocks
It was a mixed session on stock markets across Europe as more banks were bailed out and the Irish Government moved to guarantee all deposits after the country slipped into recession.

Our Europe correspondent, Emma Alberici, reports after plunging 147 points in early trading, London's FT100 recovered to end 83 points higher at 4,902.

Britain's banks were again pummelled, with HBOS closing down 14 per cent, amid market speculation that Lloyds TSB may reduce its offer for the troubled lender.

Belgian-French group Dexia was bailed out by the Belgian, French and Luxembourg government to the tune of $11 billion.

The Irish government moved to shore up confidence by guaranteeing all bank deposits for the next two years at the country's six main banks.

That rescue deal came just days after Ireland became the first member of the Eurozone to fall into recession.

Produced by Radio Australia and Australia Network