Stocks fluctuate as investors mull future of AIG

NEW YORK – Stocks fluctuated Tuesday following a report that the government is considering extending aid to troubled insurer American International Group Inc. — the latest in a string of companies that investors worry could be undone by a shortage of cash.

A partial recovery in several other financial companies helped the sector show signs of life a day after leading Wall Street to its worst session in years. Investors also grew hopeful about a Federal Reserve interest rate cut.

Worries about AIG's well-being intensified Monday and early Tuesday after several ratings agencies downgraded the company. Lower ratings can add to the amount of money the already cash-strapped company has to set aside. Investors fear that a failure by the world's largest insurer would touch off a wave of financial turmoil.

But a CNBC report said the government is at least discussing extending a financial lifeline to the company; it cautioned that an agreement is far from certain and also that the company isn't likely to find help from the private sector. AIG fell $2.07, or 43 percent, to $2.69 after being down nearly 75 percent in earlier trading.

source: http://news.yahoo.com/story//ap/20080916/ap_on_bi_st_ma_re/wall_street