A Kent expert has welcomed the US government's bail-out of its housing market which quickly buoyed London shares.

Stocks in banking and housebuilding rose as the US government said that it was taking over stricken mortgage giants Freddie Mac and Fannie Mae.

Canterbury-based Jagjit Chadha, professor of economics at the University of Kent, said the move to end the US credit crunch was likely to be good news for the UK economy.

He said: "I think, given the position, the US government had no option. The US has been in a real recession since the turn of the year.

"In London this support from the US government is seen as a broadly positive thing. As we have seen immediately, share prices in London have reacted positively. Prior to this they were falling quite heavily.

"The move by the US government is implicitly also providing support for the UK and for the banking sector and that is why you have seen share prices rise here."

Mr Chadha said he did not believe the economic situation in the UK was likely to become as serious as it had in the US.

He said: " We are unlikely to see widespread repossessions to the extent that they have in the US."

In early trading London's FTSE 100 index was 3.5% ahead.

Recent figures show that about 9% of US homeowners were behind on their payments or faced repossession.

The rescue package could cost the US government £100 billion.