Insurance Australia Group (IAG) has the all clear from the competition watchdog to buy the 'good assets' of failed Canterbury insurer AMI.

Stocks on Wall Street have fallen for a third day, the longest losing streak for the S&P 500 Index since June, as the financial sector bore the brunt of bearish comments and concerns about a market correction.

An early rally, which pushed the Dow Jones Industrial Average up more than 60 points at its morning high, collapsed and the index closed 185.68 points, or 1.96%, down at 9310.60, its worst drop in two weeks.

Stocks on Wall Street and in Europe have risen for a third day as insurance group AIG said it would repay the government and data on US manufacturing and economic indicators added to evidence the recession has ended.

AIG rallied 26% for the top gain in the S&P 500 while Google climbed 3.2% after being added to Goldman Sachs’ “conviction buy” list.

The S&P 500 closed 1.1% higher at 1007.37. The Dow Jones Industrial Average jumped 70.89 points, or 0.8%, to 9350.05. Two stocks advanced for each that fell on the New York Stock Exchange.

Following a massive government bailout and furore over $US165 million in staff bonuses, AIG has now moved to rebrand its property and casualty insurance arms as Chartis.

Once the 18th-largest public company in the world, the US government took over 79.9% of AIG for a $US182.5 billion loan last year following the company’s credit downgrade and liquidity crisis.

Insurer AIG is stepping up plans to list its American International Assurance division (AIA Group) on an Asian stock exchange.

Local insurer AIG Life is part of the AIA Group, which holds assets of more than $US60 billion with a strong presence in Asia.

AIG’s adviser The Blackstone Group is now looking for coordinators across the globe to help run the initial public offer.

Hawking off AIA is a key step for AIG as it seeks to repay hundreds of billions in loans from United States authorities.
 

Stocks on Wall Street posted their biggest weekly decline since October as Friday revealed jobless numbers in the US reached the highest level in 25 years.

Earlier in the week, AIG reported the largest corporate loss of $US61.7 billion, GE looks like losing its top credit rating and shares in Citigroup, once one of the world’s biggest banks, fell below a dollar to as low as 97USc. AIG and GE both lost 17%.