Washington - The US Federal Reserve Board late Tuesday announced that it would lend up to 85 billion dollars to embattled insurance giant American International Group (AIG).

In a move to calm financial markets fearing a possible second major Wall Street bankruptcy this week, the Fed engineered an AIG bailout through a two-year loan that gives the government a stake of 79.9 per cent in the conglomerate.

"The board determined that, in current circumstances, a disorderly failure of AIG could add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth, and materially weaker economic performance," the Federal Reserve said in a statement.

Taipei - Taipei stocks reboun

Tokyo

New York - Embattled insurance giant American International Group (AIG) will receive a government loan of 85 billion dollars to give the conglomerate time to sell off assets to avoid bankruptcy, business news channel CNBC reported late Tuesday.

Citing unnamed sources, the broadcaster said that the federal government would receive a state of 80 per cent in AIG, in exchange for the bridge loan.

Remaining AIG stockholders would lose most of their equity in the deal, CNBC reported.

The insurer, facing a possible bankruptcy filing as early as Wednesday, is seeking help through the Federal Reserve, the US central bank.

New York - The giant insurance conglomerate American International Group (AIG) remained tottering on the brink of collapse Tuesday, with no end in sight to emergency rescue talks between company executives, government officials and private stakeholders.

As time was quickly running out, there was still no outcome Tuesday afternoon from five-day-long talks at the New York Federal Reserve. AIG in a statement said it was continuing to pursue a variety of options.

AIG, the largest US insurer, needs as much as 75 billion dollars in loans to stay afloat. Three major US credit rating agencies downgraded AIG's standing Tuesday morning.

New York/Washington  - US stocks made strong gains after a wild day of trading Tuesday, pulling back from the worst day on Wall Street since the September 2001 terrorist attacks.

The Dow Jones Industrial Average rose 1.3 per cent, largely on investors' hopes that the government would come to the rescue of American International Group Inc (AIG), the largest US insurer. The broader Standard & Poor's 500 Index surged 1.75 per cent.