NEW YORK/LONDON, Oct 3: US stocks were higher but pared gains on Friday as financial shares came off their peaks due to profit-taking after passage of the $700 billion financial sector bailout by the US House of Representatives.

“We’re not seeing much of a rally, though we expected a ‘sell the news’ reaction,’ with the market selling off after a brief run-up. The key will be if we stabilise by the end of the day,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

The Dow Jones industrial average was up 121.14 points, or 1.16 per cent, at 10,603.99. The Standard & Poor’s 500 Index was up 17.07 points, or 1.53 per cent, at 1,131.35. The Nasdaq Composite Index was up 27.03 points, or 1.37 per cent, at 2,003.75. Before the House vote the indexes had risen by more than three per cent.

As markets licked their wounds from a punishing session on Thursday, attention was focused on a new vote on the rescue plan in the House of Representatives.

Wells Fargo shares rose 5.6 per cent to $37.15 and Wachovia surged 74 per cent to $6.81 on the news. Citi shares slid 10.1 per cent to $20.14.

Earlier, the London FTSE 100 index of leading shares jumped 2.26 per cent to finish at 4,980.25 points and in Paris, the CAC 40 added 2.96 per cent at 4,080.75 points.

In Frankfurt, the DAX was up 2.41 per cent at 5,797.03 points. All three markets had shed about two per cent in value on Thursday.

In contrast, Asian markets fared badly. Tokyo closed down two per cent, Hong Kong dived 2.9 per cent and Sydney shed 1.4 per cent.

With Seoul and Shanghai closed for public holidays, most of Asia’s major bourses were down. Tokyo slid two per cent to close at a three-year low, Hong Kong ended down almost three per cent and Sydney finished 1.4 per cent lower, while Singapore was 2.81 per cent off.

Taipei clawed back earlier losses to post a 0.7 per cent gain on bargain-hunting.

On other markets Manila was down 1.78 per cent, New Zealand was off 2.5 per cent, Kuala Lumpur shed 0.2 per cent and Bangkok was 1.28 per cent lower. In later afternoon trade Mumbai was 3.89 per cent down.—Agencies