NEW YORK - US stock markets rebounded strongly on Tuesday after banking giant Citigroup said it would gain a US$7.5-billion (S$10.9 billion) injection from a state-run United Arab Emirates investment fund.

Citigroup has seen its finances plagued by the US housing slump and a related credit squeeze in recent months. It has warned investors it will likely be forced to make write-offs of up to US$11 billion largely due to soured mortgage investments.

The Dow Jones Industrial Average ended up a hefty 215.00 points or 1.69 per cent at a close of 12,958.44. The key index had slumped by 237 points a day earlier and has lost considerable ground this month amid fears of an economic slowdown.

'Financial stocks are leading today's comeback attempt after news that Citigroup will receive a US$7.5-billion cash infusion from Abu Dhabi,' said Al Goldman, a chief market strategist at AG Edwards.

Although the wider market regained some confidence from Citigroup's investment news, the bank's own stock floundered as analysts said it was still juggling multiple financial difficulties.

Citigroup's shares closed down 1.2 per cent at US$30.32 after falling under US$30 for the first time in five years a day earlier.

Other financial shares moved higher, however.

Bank of America's stock finished up 2.5 per cent at US$42.94 while Goldman Sachs gained 2.8 per cent to US$213.33 and Merrill Lynch closed 3.6 per cent higher at US$53.07.

The day's economic news remained subdued as the Conference Board said US consumer confidence sank for the fourth month in a row in November to its lowest level in more than two years amid economic uncertainty.

Conference Board

The private business research group said its consumer confidence index fell to a lower-than-expected 87.3 points, from a revised 95.2 points in October.

'Consumers' apprehension about the short-term outlook is being fuelled by volatility in financial markets, rising prices at the (gasoline) pump and the likelihood of larger home heating bills this winter,' said Lynn Franco, the Conference Board's research director.

Oil prices down

Wall Street gained some relief from oil prices as New York's main oil futures contract, light sweet crude for January delivery, closed down US$2.46 at US$95.24 a barrel.

Google's shares closed up 1.1 per cent at US$673.57 after the Internet search giant said it would invest hundreds of millions of dollars in advanced solar, wind and geothermal power systems along with other technologies promising potential environmental improvements. -- AFP

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