The Dow Jones industrial average surged back above 8,000 yesterday after reports that Timothy Geithner, the president of the Federal Reserve Bank of New York, would be named the next US Treasury Secretary.

The index closed up 494.13 points, rising more than 6 per cent, to close at 8,046.42, and the S&P 500 Index rose 6.3 per cent, or 47.57 points, to 800.

However, the Dow still lost 5.3 per cent over the week as investors took flight on fears of a lasting and deep recession and worries continued over Citigroup, which lost another 20 per cent yesterday to close at $3.77.

Mr Geithner, 47, had been seen as one of two main candidates for the Treasury job along with Lawrence Summers, who served as Treasury Secretary under President Clinton. There were also reports that President-elect Obama would name Bill Richardson, the Governor of New Mexico, as Commerce Secretary.

The FTSE 100 fell sharply yesterday as concern about a global recession again gripped the market. The index of Britain’s leading 100 companies sank by 94.03 points to 3,780.96, completing a miserable week in which it has fallen by 11 per cent.

Earlier, analysts urged Mr Obama to exert more influence on current government policy – and to end uncertainty over whom he will name as Treasury Secretary.

Paul Krugman, the winner of the Nobel Prize for Economics this year, said that if Mr Obama did not begin fleshing out his economic policies soon, the US economy would deteriorate as badly as it did in 1932-33 during the transition from Herbert Hoover to Franklin Roosevelt.

Sterling clawed its way back from a record low against the euro and a 6½year low against the dollar as it was lifted by hope that Monday’s PreBudget Report will offer enough measures to stimulate the UK economy.

The price of gold, a traditional haven, rocketed by almost 7 per cent to hit $792.50 an ounce.

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