General Motors Corp's entry into bankruptcy on Monday, said it was part of a "viable achievable plan that will give this iconic company a chance to rise again," US president Barack Obama said.

Obama said he hoped the US firm would emerge quickly from bankruptcy court, and said the government was ready to commit an additional US$30 billion to help the company get on its feet.

He said the government would own 60 per cent of the new GM, and acknowledged that could prove controversial with some.

Seeking to ease those concerns, Obama said, "What I am not doing, what I have no interest in doing, is running GM."

Speaking at the White House, the president said auto executives "will call the shots and make the decisions about turning this company around."

He said the government would refrain from playing a management role in all but the most critical areas.

"Our goal is to help GM get back on its feet ... and get out quickly," he said of the federal government.

Obama spoke as GM entered bankruptcy court at the same time Chrysler was looking to emerge after a two-month reorganisation.

Over the weekend, a bankruptcy judge gave the US automaker approval to sell most of its assets to Italy's Fiat, part of a plan under which the US government will own somewhat less than 10 per cent of the firm.

Pillar of capitalism

Ford Motor Company, the other large US automaker, has said it can weather the current economic and industry crises on its own.

Under the GM plan envisioned by Obama's auto industry taskforce, the federal government will wind up with 60 per cent ownership in the one-time pillar of American capitalism.

That comes in addition to its smaller stake in Chrysler, as well as significant interests in banks, insurance giant AIG and two mortgage industry giants, Fannie Mae and Freddie Mac.

Obama thanked the Canadian and German governments for the part they played in developing the GM plan.

Upbeat picture

The markets barely reacted to the GM bankruptcy filing, rising instead on positive economic news.

Wall Street is starting June with a gain, boosted by reports that paint a more upbeat picture of the global economy.

Investors and GM instead focused on better-than-expected reports on manufacturing, consumer spending and construction spending.

Stocks had already started higher following gains in Europe and Asia, where markets surged on surveys showing improvements in manufacturing.

The Dow Jones industrial average rose about 223 points, or 2.6 per cent, by mid-afternoon.

Because GM's bankruptcy filing was so well telegraphed in advance, the move did not faze investors.

"It's remarkable the degree of resilience that the equity markets have shown," said Jack A. Ablin, chief investment officer at Harris Private Bank, referring to the market's ability to look past GM and other disruptions.

"We've had plant closings, we've had dealer shutdowns. I think the reverberations have already been felt."

The Dow Jones industrial average also announced Monday it was dropping GM as a component after the automaker filed for bankruptcy, as well as Citigroup Inc, in which the government now owns a significant stake.

GM and Citi will be replaced with Travelers Cos and Cisco Systems Inc next week.

- AP