US shares have opened higher on the news of former US Treasury Secretary Larry Summers' withdrawal from the race to be head of the US central bank.
He was among the front-runners to succeed Ben Bernanke as head of the Federal Reserve, one of the most powerful jobs in the US.
He was thought to want to reduce the amount of money being pumped into the economy faster than other candidates.
The Dow Jones rose 144.45 points, or 0.9%, to 15,520.51 in early trading.
Earlier, markets in Europe and Asia had risen. In mid-afternoon trade in Europe, the UK's FTSE 100 share index was up 0.8%, Germany's Dax index was 1.2% higher and France's Cac 40 was up 0.9%.
“Start Quote
End QuotePresident Obama cannot be entirely comfortable with Janet Yellen as Fed chair or he would have nominated her already”
On the currency markets the US dollar was down 0.6% against the euro and 0.5% against the pound.
Democrat oppositionIn a letter to President Obama, Mr Summers said any confirmation process for him was likely to be "acrimonious".
Mr Summers was thought to be the candidate favoured by the president, but he was opposed by other Democrats.
He was Treasury Secretary during the Clinton administration from 1999 to 2001 and had also been chief economist of the World Bank from 1991 to 1993.
He served President Obama as director of the National Economic Council in 2009 and 2010.
As Treasury Secretary he was in favour of deregulation, which some people consider gives him part-responsibility for the problems in the financial sector that led to the 2008 financial crisis.
Other members of the Democratic Party oppose him because of remarks he made when he was president of Harvard University.
At a conference in 2005 he suggested that women had less innate ability in maths and science than men.
Janet Yellen is among the front-runners for the top job at the Federal Reserve
In his letter on Monday he said: "I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interests of the Federal Reserve, the administration or ultimately, the interests of the nation's ongoing economic recovery.''
'Expertise, wisdom and leadership'Mr Obama said he had accepted Mr Summers' decision.
The president said in a statement: "Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today."
Mr Obama added that he would always be grateful to Mr Summers for his "tireless work and service on behalf of his country" and looked forward to continuing to seek his guidance and counsel in the future.
Mr Summers' withdrawal makes it more likely that current Federal Reserve vice-chairman Janet Yellen will get the top job. She would be the first woman in the role.
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Former White House adviser Pippa Malmgren considers the front-runners to take over
Another possible candidate is former Federal Reserve vice-chairman Donald Kohn.
Former Treasury Secretary Timothy Geithner has said he does not want the top job at the central bank, although it is rumoured in Washington that the president may try to persuade him to reconsider.
Economic stimulusThe chairman of the board of the Federal Reserve is always a powerful position, but the new appointee will be taking over at a particularly sensitive time.
Ben Bernanke will be standing down at the end of January 2014, just as the central bank is starting to cut back on its economic stimulus measures.
The Federal Reserve's interest rate-setting committee is meeting this week and is expected to announce how it will scale back these measures.
Continue reading the main storyLast Updated at 10:21 ET
| Dow Jones | 15508.99 | Up | 132.93 | 0.86% |
| Nasdaq | 3735.96 | Up | 13.78 | 0.37% |
| S&P 500 | 1700.53 | Up | 12.54 | 0.74% |
| FTSE 100 | 6617.11 | Up | 33.31 | 0.51% |
| Dax | 8600.88 | Up | 91.46 | 1.07% |
| BBC Global 30 | 6815.93 | Up | 9.38 | 0.14% |
At the moment it is buying $85bn (£53bn) of bonds a month as part of the quantitative easing programme, which is designed to pump money into the financial markets in an attempt to reduce the cost of borrowing.
Mr Summers was seen as being in favour of scaling back the programme more quickly than the other candidates.
"It had been perceived that if Summers had come into the Fed, he'd have been more likely to remove US policy accommodation quicker," said Sam Tuck, a currency strategist at ANZ.
"Now that he's withdrawn his name there's speculation that policy accommodation withdrawal will take longer."
There has been considerable market response to the news of Mr Summers' withdrawal and the view that it is likely to mean US interest rates will stay lower for longer.
Emerging economies have been among the beneficiaries of quantitative easing because some of the money pumped into the US system has been spent on government bonds from other countries.
As a result, the main indexes in the stock markets in India, Thailand and the Philippines all rose nearly 2%.
Source: BBC News - Business http://www.bbc.co.uk/news/business-24109718#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
