THE US Treasury announced overnight a rescue of a money market fund operated by investment manager The Reserve, with some $US6.3 billion ($10.3 billion) in assets.

"The Treasury has agreed to serve as a buyer of last resort for the fund's securities, which consist of short-term US government and government sponsored enterprise securities,'' the Treasury said.

"This action is being taken to ensure that the fund is liquidated in an orderly and timely fashion.''

A Treasury official said the government agreed to to purchase any remaining securities in 45 days, which at maximum would total $US5.6 billion.

The fund was permitted to suspend share redemptions as of September 17, in agreement with the Securities and Exchange Commission.

The action comes after the government agreed in September to a voluntary guarantee program to stem a run on money market funds, which are generally seen as safe investments but have been pressured by the credit squeeze affecting some of their underlying investments.

The Treasury Department said it "does not foresee a need to take similar actions with regard to any other funds'' because Reserve was the only one to have suspended redemptions. (www.news.com)