WASHINGTON — The Federal Reserve approved a half-percentage point cut in its discount rate on loans to banks Friday, a dramatic move designed to stabilize financial markets roiled by a widening credit crisis.

The action sent stocks soaring, with the Dow Jones industrial average up more than 300 points right after the opening bell. The blue chip index finished the day up 233.30 points at 13,079.08.

The decision means that the discount rate, the interest rate the Fed charges to make direct loans to banks, will be lowered from 6.25 percent to 5.75 percent.

The Fed did not change its target for the more important federal funds rate, which has remained at 5.25 percent for more than a year, but it sent a strong signal in the wording of its statement that it was prepared to cut that rate as well.

It did that by dropping any reference to inflation, which was the worry that previously had kept it from cutting the federal funds rate, and instead stated that "the downside risks to growth have increased appreciably."

Markets worldwide rebound after Fed cuts discount rate

LONDON — Markets across the globe, save for Asia, rebounded Friday after the U.S. Federal Reserve cut its primary discount rate, a surprise move aimed at easing credit and calming financial markets.

By the time the Fed acted, Asian markets had already closed down across the board. The Nikkei 225 index in Tokyo fell 5.4 percent to end at 15,273.68, its lowest close in a year.

Investors from Sao Paulo to London, however, bid up shares almost immediately after the Fed announcement.

The U.K.'s benchmark FTSE 100 surged 3.5 percent to 6,064.20, reversing much of its losses of a day earlier. France's CAC 40 index rose 1.9 percent to 5,363.63 and Germany's DAX index was up 1.5 percent to 7,378.29.

Northwest Airlines a step closer to possibly owning Midwest Air

MILWAUKEE — Northwest Airlines Corp. could end up owning rival Midwest Air Group Inc., which has agreed to a $450 million buyout offer from private equity firm TPG Capital.

Northwest is a passive investor in the deal and may eventually buy Midwest outright, TPG partner Richard P. Schifter said in a conference call Friday morning.

The equity firm may want to cash out of the deal some day, he said, and Minneapolis-based Northwest could become the sole owner. Schifter said such a move could be several years away.

Midwest's decision to sell to TPG came late Thursday night and ended months of back-and-forth with another rival, AirTran Holdings Inc.

Midwest said TPG will pay $17 per share cash, worth about $450 million based on Midwest's 26.6 million shares outstanding.

FTC appeals ruling on Whole Foods purchase of rival Wild Oats

WASHINGTON — Federal regulators on Friday appealed a court ruling that allowed Whole Foods Market Inc. to purchase its rival organic grocer Wild Oats Markets Inc.

The Federal Trade Commission is seeking to block the $565 million acquisition, arguing that it would stifle competition and lead to higher prices in the premium organic food market. The companies say the deal won't hurt consumers because they also compete with conventional supermarkets such as Safeway Inc. and Kroger Co., which are selling increasing amounts of organic products.

U.S. District Judge Paul Friedman rejected the FTC's arguments in a ruling late Thursday and denied the agency's request to block the transaction.

On Friday, the FTC also asked the U.S. District Court for the District of Columbia to delay the closing of the deal pending the outcome of the appeal. That request was denied by Friedman Friday afternoon. A similar request for a stay is still before the U.S. Court of Appeals for the D.C. Circuit.

Stricter FDA scrutiny of drugs take toll on company stock prices

TRENTON, N.J. — Under growing scrutiny since the blockbuster painkiller Vioxx was pulled from the market, the Food and Drug Administration in recent months has rejected a slew of experimental drugs or delayed their approval and required more data.

Besides keeping drugs some patients might desperately need off the market, the rejections have battered drug company stock prices and are expected to increase the cost and time it takes to develop a new drug, not to mention the price of developing future ones.

Denials and delays have hit everyone from pharmaceutical giants such as GlaxoSmithKline PLC, Merck & Co., Novartis AG, Sanofi-Aventis and Wyeth down to struggling startups trying to get their first drug on the market. The FDA also has recently stiffened warnings on several drugs, most prominently diabetes drugs Avandia and Actos, and five months ago made Novartis withdraw its constipation drug, Zelnorm.

Accounting mistakes could cost Dell up to $150 million

DALLAS — Dell Inc. executives have finally wrapped up a yearlong internal investigation into accounting problems at the computer company, and the mistakes could end up costing them as much as $150 million.

"This is not a happy story for Dell nor one that we're terribly proud of," Vice Chairman and Chief Financial Officer Don Carty said Thursday after Dell announced it would reduce more than four years' worth of earnings because it misled auditors and manipulated results to meet performance goals.

The beleaguered company said its net income for the restatement period — all of fiscal 2003 through 2006 and the first quarter of fiscal 2007 — will be reduced by between $50 million and $150 million, or 2 cents to 7 cents per share.

The largest reductions in quarterly profits were expected to be in the first quarter of fiscal 2003 and the second quarter of fiscal 2004, each lowered between 10 percent and 13 percent.

Former CEO of Brocade Communications charged with civil securities fraud

SAN FRANCISCO — The former chief financial officer of Brocade Communications Systems Inc. was charged Friday with eight counts of civil securities fraud for allegedly ignoring that the company was improperly accounting for backdated stock option awards.

The Securities and Exchange Commission alleged that Michael Byrd, 45, who served as Brocade's CFO from 1999 to 2001, knew the company should have been incurring compensation expenses for certain option grants to workers but failed to incorporate those charges into the financial reports released to investors.

The SEC sued Byrd in U.S. District Court in San Francisco. He is accused of violating various securities laws and defrauding investors by approving faulty financial statements.

Borse Dubai challenges Nasdaq with $3.95 billion bid for Nordic stock exchange operator

STOCKHOLM, Sweden — Borse Dubai made a $3.95 billion takeover bid for OMX AB on Friday, challenging U.S.-based Nasdaq Stock Market Inc. for ownership of the Nordic stock exchange operator.

The owner of the Dubai stock exchange is offering 230 kronor ($32.84) per OMX share. That is a premium of nearly 14 percent over the cash-and-share offer from Nasdaq, which struggled to gain a foothold in Europe before unveiling the OMX deal in May.

Rumors of a bidding showdown for OMX have been rampant since last week, when Borse Dubai revealed it had taken a 4.9 percent stake the company and secured options to acquire more than 25 percent.

In addition to the higher premium that would be paid all in cash, OMX would get access to one of the world's largest liquidity pools, said Per Larsson, the former OMX chief executive who is now CEO of the Borse Dubai-owned Dubai International Financial Exchange.

Dow, S&P rise

By The Associated Press

The Dow industrial average surged 233.30, or 1.82 percent, to 13,079.08.

The Standard & Poor's 500 index rose 34.67, or 2.46 percent, to 1,445.94, and the Nasdaq composite index rose 53.96, or 2.20 percent, to 2,505.03.

Light, sweet crude for September delivery rose 98 cents to settle at $71.98 a barrel on the New York Mercantile Exchange.

Nymex natural gas futures gained 13.5 cents to settle at $7.01 per 1,000 cubic feet.

September gasoline rose 6.05 cents to settle at $2.0388 a gallon, while heating oil gained 3.44 cents to $2.0173 a gallon.