(08-31) 09:39 PDT NEW YORK, (AP) —

Stocks ran up big gains Friday as investors took comments from President Bush and Federal Reserve Chairman Ben Bernanke as reassuring signs Wall Street wouldn’t be left to deal with problems in the mortgage and credit markets on its own.

Investors initially balked early in Friday’s session when comments from Bernanke didn’t indicate a cut in the benchmark federal funds rate was imminent. However, investors seemed to move past some of their initial disappointment and concentrate on comments that the Fed would step in if needed.

Bernanke, speaking at the Fed’s annual conference in Jackson Hole, Wyo., said the central bank will “act as needed” to prevent the credit crisis from hurting the national economy.

The major indexes fluctuated but by midday extended their gains after President Bush spoke about details of a plan to help borrowers facing trouble paying their mortgages.

“You’ve got all the speeches working for the market here,” said Michael Church, portfolio manager at Church Capital Management in Philadelphia. “What we’ve seen in the last few weeks is that Ben Bernanke and the Federal Reserve are paying attention to what’s going on. They will help correct the credit markets. For now, we’re in a trading range and we have to sort through this mess.”

The Dow Jones industrial average rose 135.10, or 1.02 percent, to 13,373.83.

Broader stock indicators also rose. The Standard & Poor’s 500 index rose 15.76, or 1.08 percent, to 1,473.40, and the Nasdaq composite index rose 23.67, or 0.92 percent, to 2,588.97.

Bond prices fell. The yield on the 10-year Treasury note, which moves inversely to its price, rose to 4.53 percent from 4.51 percent late Thursday. The U.S. bond market will be closing early at 2 p.m. EDT ahead of the holiday weekend.

Since the stock market started tumbling in late July on fears that problems in mortgage and corporate lending would lead to a credit freeze and hurt the economy, the Fed has injected tens of billions of dollars into the banking system and lowered its discount rate Д the charge on its loans to commercial banks. But the Fed hasn’t yet said it will lower the benchmark federal funds rate, and Wall Street’s uncertainty over what the central bank will do next has kept the markets volatile. The Fed’s next meeting is Sept. 18 and some investors had expected the central bank might hint at or even go through with a rate cut before then.

Economic news, as Bernanke indicated Friday, appeared less relevant than normal as investors remained focused on upheaval in the credit market and mortgage concerns.

The Commerce Department reported on personal income and spending and the core personal consumption expenditures deflator, one of the Fed’s preferred gauges of inflation. Personal incomes and spending edged up by 0.5 percent and 0.3 percent, respectively, and year-over-year core PCE stayed at 1.9 percent Д within the Fed’s comfort range.

The Commerce Department also said orders to factories jumped by 3.7 percent in July, topping a 3.3 percent increase that had been expected. The rise, which came after three months of modest gains, followed an 11 percent jump in demand for transportation goods, including the biggest increase in orders for cars in more than four years.

Also, the Chicago purchasing manager’s index rose to 53.8 in August from 53.4 in July.

Church said the market was helped by Friday’s economic figures as well as a stronger-than-expected reading on second-quarter gross domestic product released Thursday.

“The consumer has been in the crosshairs of the bears for a while now,” he said, referring to concerns that a pullback in consumer spending will upend economic growth. “I think this helps clarify a lot of the situation. The news from the consumer is good.”

Mortgage lenders also got a boost from Bush’s comments. He said America’s economy can “weather any turbulence” in what he termed a period of transition for the financial markets. He outlined proposals to assist borrowers in trouble from a pullback in the housing market and credit problems.

Countrywide rose 20 cents to $19.84, while Impac Mortgage Holdings Inc. rose 4 cents to $1.69.

In other corporate news, Dell Inc. reported after the market closed Thursday that its second-quarter profit soared 46 percent. The computer maker slipped 11 cents to $28.36.

The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude rose 75 cents to $74.11 per barrel on the New York Mercantile Exchange.

Advancing issues outnumbered decliners by about 5 to 1 on the New York Stock Exchange, where volume came to a light 466.8 million shares. Trading in late August often is light as investors take end-of-summer vacations.

The Russell 2000 index of smaller companies rose 6.52, or 0.83 percent, to 789.63.

In Asian trading, Japan’s Nikkei stock average surged 2.57 percent, Hong Kong’s key index jumped 2.13 percent, and China’s Shanghai Composite Index rose 0.99 percent.

In Europe, Britain’s FTSE 100 rose 1.47 percent, Germany’s DAX index rose 1.57 percent, and France’s CAC-40 rose 1.25 percent.

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THE troubled Macquarie Bank hedge fund Macquarie Fortress has confirmed it has lost more than 27 per cent of its value and stands to lose even more this month as it deals with the continuing credit crisis.

In a statement to the Australian Securities Exchange yesterday, Macquarie Fortress Notes director Peter Lucas confirmed the fund’s value had fallen to 72.8 in the dollar on July 31, falling below its most recent warning on August 6 that the fund would lose up to 25 per cent of its value.

Yesterday Mr Lucas predicted the notes would fall another 1.3 in August, taking total losses to almost 30 per cent. But he said it was on target to continue paying interest at the rate when it was first launched.

Macquarie Fortress Notes and the unlisted Macquarie Fortress Fund had investments in a senior loan portfolio of almost $US1 billion ($A1.2 billion) before the crisis, although that figure has dropped in line with the downgrades.

News of the fund’s problems on August 1 led to a hammering for Macquarie Bank amid a broader share price drop as the market came to grips with defaults in the subprime mortgage market in the United States.

On August 1 Macquarie Bank shares plunged $8.80 or almost 11 per cent to $73.70, and they subsequently fell to $64. The shares closed yesterday at $73.30, up $2.08 for the day.

The crisis has affected confidence in debt markets generally, with hedge funds operated by Bear Stearns and Basis Capital collapsing as investors savagely marked down the complex debts they invested in.

Macquarie Fortress’ problems have been increased by a level of five times debts over the senior loan assets it holds in the portfolio. For example, its losses have come about because of falls in value of the senior loans it holds by as little as 5 per cent. Macquarie Fortress has previously announced it has sold $US133 million in loans to reduce its debts.

Mr Lucas said the notes represented 0.5 per cent of Macquarie Bank’s assets under management.

LOS ANGELES: EMI Group, one of the largest music conglomerates in the world, has said that it would recommend that shareholders accept a 2.4 billion buyout offer from a private investor, Terra Firma Capital Partners.

The board of EMI said Monday that it would recommend that shareholders approve the $4.73 billion offer from Terra Firma. If approved, the deal would remove EMI from the public markets, where its financial problems have included two profit warnings to investors this year.

EMI, which is based in London and releases music by the Beatles, Norah Jones and Coldplay, has spent years in and out of merger talks with various potential buyers. Terra Firma could profit from the deal by subsequently selling EMI, in whole or in part, to a rival like Warner Music Group, with which EMI was in advanced merger talks last summer.

Those discussions stalled after a European Union court ruling raised questions about the regulatory approval of an earlier music merger between Sony and Bertelsmann.

Terra Firma offered 265 pence a share of EMI, a premium to the last Warner offer of 260 pence a share. But that is considerably less than the figures being discussed last year, when EMI and Warner made a series of offers and counteroffers for each other.

EMI shares were up 9 percent on Monday, closing at 271 pence, on speculation that Warner might sweeten its offer. Shares rose to 273 pence in trading Tuesday afternoon.

Warner had been seen as able to offer a higher bid than a private investor because of the costs it would save by absorbing EMI and slashing overhead in a combined operation. But EMI, in recommending the Terra Firma offer, said it came “without regulatory uncertainty and with the minimum of operational risk to the company.”

EMI also announced Monday that it had posted a net loss of 288.5 million for its latest financial year, because of restructuring charges. Sales dropped 15 percent to 1.8 billion after a dramatic slump in purchases of CDs.

The company brought forward its earning announcement by two days so that it would accompany news of the offer.

John Gildersleeve, chairman of EMI, said that the offer by Terra Firma was the best of several it had received.

“Terra Firmas offer is the most attractive proposal received and delivers cash now,” he said.

The offer comes as the Internet continues to upend the lock that record labels once had on the distribution of songs. “The global music industry is undergoing significant change,” Gildersleeve said. “Whilst EMI is confident in its ability to deliver its recently announced restructuring plans, significant uncertainty exists as to the timing and extent of future market developments.”

Terra Firma is led by Guy Hands, who built up Nomura Holdings buyout business in the 1990s before leaving in 2002 to run his own firm with Nomura support. Last month, Hands lost out to Kohlberg Kravis Roberts in the 11.1 billion takeover battle for Alliance Boots, the British pharmacy chain.

EMI has established a reputation after having beaten its larger rivals, Universal Music Group and Sony BMG, in moving its catalogue to the Internet, despite widespread piracy of digital copies of music.

In April, EMI said it would make its recordings available on Apples iTunes and other music downloading services without copy protection, a step that other recording companies have resisted. The European Commission responded by saying that EMI and Apple faced an antitrust investigation over the pricing of songs on iTunes.

Information from The Associated Press was used in this report.