THE ASSOCIATED PRESS

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SYDNEY, Australia - The Australian share market rebounded strongly Monday in response to a government announcement that it would guarantee all bank and other lender deposits for three years.

The benchmark S&P/ASX200 index rose more than 5 per cent in the first 20 minutes of trading. The broader All Ordinaries index also gained 5 per cent.

Prime Minister Kevin Rudd announced Sunday that the government would guarantee deposits of any size in Australian banks for the next three years. He offered a government guarantee for all term wholesale funding by Australian banks operating in international credit markets, and said the government will buy a further Australian dollars 4 billion (US$ 2.6 billion) in mortgage-backed securities.

Monday's recovery follows a more than 8 per cent plunge on the S&P/ASX200 index on Friday, the biggest single-day fall since the index was created in 1993.