Stocks on Wall Street staged a significant recovery yesterday after US President Bush urged Congress to approve a stimulus package of $60-$75 billion (€65-€81.5 billion), including tax cuts for individuals and businesses for the coming year.

The package is designed to prevent the United States plunging into a deep recession in the wake of the September 11th terror attacks on New York and Washington which disrupted trade and travel.

The total stimulus sought by the president in his campaign to pump cash into the economy is now $110 billion for the fiscal year beginning October 1st.

Mr Bush and Congress have already agreed on a $50 billion injection of Federal funds to start rebuilding lower Manhattan.

"I know people are hurting," Mr Bush said told business leaders on a visit to New York yesterday, his second since the attacks. The attacks "shocked our economy just like it shocked the conscience of our nation". The tax cuts, he said, must provide "a kick start to give people reason to be confident, and we will do that".

The package being worked out includes corporate tax cuts, which could weaken the incentive for American businesses to invest abroad in countries like the Republic where the corporate tax rate for multinationals is less than a third of that of the United States. Investment tax credits are also among the options on the table.

US Treasury Secretary Paul O'Neill told Congress in Washington yesterday that the stimulus package was aimed at restoring consumer demand, supporting business investment, and helping those disadvantaged by the attacks, including those laid off.

Mr O'Neill confirmed economists' fears of a gathering recession by saying he expected negative growth in the third quarter, and that a similar performance in the fourth quarter could be avoided only if consumer confidence was restored.

The Dow Jones Industrial Index rose above 9,000 yesterday after President Bush's proposal was announced. It closed at 9,123.78.

On the Nasdaq the software sector led a technology rally, surging over 100 points by late afternoon.

Wall Street's performance was helped by a surprisingly upbeat report from the National Association of Purchasing Management, which said its non-manufacturing index climbed to 50.2 from 45.5 in August, pointing to an unexpected rise in the service sector. Anything above 50 points means expansion.