updated 11/20/2008 1:55:47 PM ET 2008-11-20T18:55:47

Shares of General Motors Corp. soared in afternoon trading, reversing the morning's historic plummet, on news of a deal that could result in a financial bailout of the automaker industry.

But the plan, which could throw the Detroit Three a government lifeline worth billions, still faces an uphill battle in a reluctant Senate.

In afternoon trading, shares of Detroit-based GM jumped 60 cents, or 21 percent, to $3.39, having initially climbed to $4 right after the news was announced.

Earlier in the day, when hopes of a possible deal were fading fast, GM shares tumbled to $1.70. That marked the company's lowest share price since June 4, 1938, when they fell to $1.69, according to the Center for Research in Security Prices at the University of Chicago. The price is adjusted for splits and other changes.

Shares of Ford Motor Co. also got a boost after taking a big hit earlier in the day, rising 35 cents, or 28 percent, to $1.61. In morning trading, the Dearborn, Mich.-based automaker's shares had sank to $1.01, matching a low set on Aug. 19, 1982.

Democrats and Republicans from auto industry states reached a deal Thursday on an alternative package that would temporarily divert money from a fuel-efficiency loan program to cover the Big Three's immediate costs. But it was unclear whether it could draw enough support to pass.

And even if deal can be reached to consider that plan, Senate Majority Leader Harry Reid, D-Nev., signaled earlier Thursday that the Senate was not likely do so until after Thanksgiving.

Reid canceled plans for a vote on a bill to carve $25 billion in new loans out of the $700 billion Wall Street rescue fund. The Bush administration and congressional Republicans oppose that plan.

Efraim Levy, an analyst for Standard & Poor's Ratings Service, earlier Thursday backed his "Sell" rating for GM's shares, but said he expects the automakers to get some kind of government help.

"While the program we expect is not a panacea, we believe that, with the current fragile economy, the government should not risk further disruption from a ripple effect from the failure of a major automaker, as the economic costs could then be greater than the aid," Levy wrote in a note to investors.

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