Fannie Mae and Freddie Mac yesterday sold a combined $3bn of short-term debt, helping to reassure stock markets that the two beleaguered US mortgage financiers could still fund their operations without a government rescue.

Fannie sold $2bn in three and six-month bills and Freddie sold $1bn of one-month paper with stronger-than-usual investor demand as buyers were attracted by higher interest rates. The sales helped to boost Fannie's shares by 15.3 per cent, while Freddie was 19.7 per cent higher.