The Dow Jones Industrial Average rose 116.76 points (1.34 per cent) to 8,808.09 in the first exchanges.

The tech-dominated Nasdaq was up 14.92 points (0.96 per cent) to 1,562.26 and the broad Standard & Poor's 500 index rose 11.08 points (1.25 per cent) to 899.75.

'Hopes are high for a resolution to the dire situation with US automakers, as reports are washing over Wall Street that the White House and congressional Democrats have finally reached an agreement in principle on a 15 billion dollar bailout plan,' said Joseph Hargett of Schaeffer's Research.

Democratic congressional leaders said they had reached a deal in principle with the White House on the rescue plan that could be ready for a vote Wednesday, but many Republican lawmakers remained skeptical of the bailout.

Even as details of the plan were still being hammered out, Democratic party leaders reportedly worked to rally support for a possible vote on the package in the House of Representatives as soon as Wednesday afternoon.

Senator Carl Levin from Michigan, the base for the auto industry, said he understands that an 'agreement has been reached,' and that it was only a matter of time before a bill was ready for a vote. -- AFP