(Repeats to wider coding, with no changes to text)
* Stocks extend rally: Shanghai composite index up 8 pct
* Treasuries rise, US stock futures dip as questions linger
* Signs of stabilisation in overnight lending among banks
By Kevin Plumberg
HONG KONG, Sept 22 (Reuters) - Asian stocks rose more than
2 percent on Monday, as investors chased bargains after details
emerged about a U.S. government $700 billion bank bailout plan,
increasing hopes the worst of the financial crisis may be over.
However, the U.S. dollar eased and U.S. Treasury debt
prices edged up, with market participants playing it safe
before the mechanics of the plan are worked out with Congress.
Willingness among investors to take more risk for higher
returns slowly returned, after news surfaced on Friday of what
is likely the biggest bailout in U.S. history, capping an
historic week in which Lehman Brothers filed for bankruptcy,
Washington rescued American International Group and Bank of
American bought Merrill Lynch.
Many aspects of the U.S. plan have yet to be thrashed out
and tensions have already arisen over Congressional efforts to
curb the executive pay of program participants. However, in
Asia, where stock markets had fallen 17 percent in September
prior to the bailout plan, the devil was apparently not in the
detail.
"The larger-than-expected U.S. rescue package is definitely
positive, and it seems Congress will approve the plan given the
dire situation financial markets are facing," said Kang
Hyun-cheol, a market analyst at Woori Investment & Securities
in Seoul.
"Investors' attention is likely to shift from financial
markets to the real economy, mainly key economic data and
corporate earnings," Kang added.
Japan's Nikkei share average <> was up 2.5 percent,
after hitting a 3-year low last week. The index has rebounded 8
percent in two days.
South Korea's KOSPI <> rose 1 percent, led by shares
of POSCO <005490.KS>, the world's fourth-largest steelmaker,
and the Shanghai composite index <> leapt 8 percent as
investors jumped back in to what had been the world's worst
performing market.
HOW EFFECTIVE WILL PLAN BE?
The bailout plan would add to U.S. taxpayers' burden after
the effective nationalisation of Fannie Mae and Freddie Mac
earlier this month and would weigh on the U.S. fiscal position,
putting the world's largest debtor even more in the hole.
As a result, U.S. S&P 500 index futures <SPc1> were down 1
percent. That was on the heels of Friday's massive rally in
stocks worldwide -- the largest ever one-day advance as
measured by market value. The MSCI main world equity index
<.MIWD00000PUS> added more than $1.5 trillion in value on the
day.
The U.S. dollar fell against the yen and the euro, as
dealers awaited further details of the bailout plan.
The dollar fell 0.6 percent to 106.84 yen <JPY=>, while the
euro rose 0.2 percent to $1.4495 <EUR=>.
"The market has come out of a near panic stage after the
U.S. government plan," said Tohru Sasaki, chief forex
strategist at JPMorgan Chase Bank in Tokyo.
"But we're still far from being able to say the problems
are solved as we don't know yet how effective the newly created
U.S. facility will be. The market looks set to remain unstable
for a while."
The 10-year U.S. Treasury note yield <US10YT=RR>, which
moves in the opposite direction to the price, slipped to 3.77
percent after jumping nearly 30 basis points on Friday.
The short-end of the market reflected slightly reduced
demand for very short-term liquidity, with yields on 3-month
and 6-month bills above 1 percent after dropping to near zero
last week as investors bailed out of money market funds.
Also, overnight U.S. dollar borrowing rates were around 2
percent on Monday, bang on the federal funds rate. During the
most dire days of the crisis, the rate rose to 6 percent in the
Asian session and had hit 10 percent at one point during the
European session.
The October U.S. light crude contract <CLc1> was largely
unchanged at $104.50 a barrel. Crude earlier slipped $1 after
Nigeria's main militant group began a unilateral ceasefire.
Spot gold <XAU=> fell 1.2 percent to $861.90 an ounce.
