(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, March 24 (Reuters) - U.S. stocks jumped and bond
prices tumbled on Monday as fears over the global credit
crisis eased as JP Morgan <JPM.N> boosted its bid for troubled
investment bank Bear Stearns and U.S. existing home sales
climbed.
The price of the benchmark 10-year U.S. Treasury bond made
its biggest single day drop in four years as the stock rally
that began last week continued to draw funds away from the
safe-haven yields of government debt.
The dollar firmed on the view that signs of a recovery in
the battered U.S. housing market could reduce the need for U.S.
interest rate cuts, drawing funds to higher-yielding
currencies.
Oil fell again, extending a slide from last week's record
to 10 percent on the stronger dollar and lingering worries over
slowing energy demand.
Trading volume on most markets was thin as financial
exchanges in Europe and parts of Asia remained closed after the
Easter weekend.
The crisis that has gripped financial markets for months
remained the center of attention. JPMorgan Chase & Co <JPM.N>
raised its all-stock offer for Bear Stearns Cos <BSC.N> to
about $10 a share, compared with $2 last week, and struck a
deal to buy nearly 40 percent of the bank.
The Federal Reserve Bank of New York backed the deal, with
support from the U.S. Treasury Department, with $29 billion in
special financing. The New York Fed will also take control of a
$30 billion portfolio of Bear's hard to sell assets.
In Europe, British Prime Minister Gordon Brown and French
President Nicolas Sarkozy will urge banks this week to make
"full and immediate disclosure" of write-offs due to the global
credit crisis, British officials said.
Uncertainty over the amount of bad debt on banks' books,
which some estimates put as high as $600 billion, has sapped
investor confidence and pushed many stock indexes around the
world into bear territory earlier this month.
Bear Stearns, which had been ranked the No. 5 U.S.
investment bank, collapsed amid large subprime mortgage losses
and fading investor confidence prompted a run on the bank.
"More write-downs are expected in the financial space but
people are starting to see a light at the end of the tunnel and
they suspect that it's not an oncoming train," said Peter
Kenny, managing director at Knight Equity Markets in Jersey
City, New Jersey.
Bear Stearns shares surged almost 80 percent to $11.38 on
the news of the five-fold increase in the bid offer from
JPMorgan, whose shares rose 1.11 percent to $46.48.
The Dow Jones industrial average <> was up 187.32
points, or 1.52 percent, at 12,548.64. The Standard & Poor's
500 Index <.SPX> was up 20.37 points, or 1.53 percent, at
1,349.88. The Nasdaq Composite Index <> was up 68.64
points, or 3.04 percent, at 2,326.75.
The dollar rallied across the board and climbed to session
highs versus the yen, boosted as U.S. Treasury prices yields
climbed after the surprising U.S. existing home sales.
The euro fell against the dollar to $1.5343 <EUR=>, from
$1.5420 just before. Against the yen, the dollar jumped to the
day's highs at 100.89 yen <JPY=>, well off a nearly 13-year low
of 95.77 yen posted last week.
The dollar index, a measure of the greenback's value
against six major currencies, was up 0.22 percent at
72.942<.DXY>. It earlier rose 73.194.
While the pace of existing homes was better than consensus
estimates, a bottom in the beleaguered U.S. housing market is
too early call, many analysts said.
Existing home sales rose 2.9 percent to a 5.03 million-unit
annual rate in February but median home prices fell 8.2
percent, the sharpest drop since the National Association of
Realtors began keeping records in 1968.
"Selling more homes cheaper -- too early to call that a
bottom," said Ian Lyngen, interest rate strategist at RBS
Greenwich Capital in Greenwich, Connecticut.
U.S. Treasury debt prices fell as a stock market rally and
positive developments on the housing and credit front weakened
the bid for safe-haven U.S. government debt.
Late in the session, the 30-year Treasury's price fell
three full points in thin trading, while its yield <US30YT=RR>,
which moves inversely to its price, rose to 4.34 percent from
4.17 percent late on Thursday.
U.S. short-term interest rate futures also fell sharply as
traders reduced their bets on a sharp rate cut. The implied
prospects for the Federal Reserve to cut a key lending rate by
half a percentage point in April fell to 22 percent from 56
percent last week. A 25 basis point rate cut, to 2 percent, is
still fully priced.
U.S. crude futures <CLc1> settled down 98 cents at $100.86
after touching a low of $99.95, bringing them further below
last week's record $111.80. London Brent crude <LCOc1> fell 52
cents to $99.86 a barrel.
The dollar's recovery from recent lows against the euro
pressured the nominal price of almost all dollar-denominated
commodities, including crude, analysts said.
Asian shares rose in holiday-thinned trade on Monday, led
by a 4 percent gain for Taiwan after an opposition win in the
presidential election boosted expectations for better trade
ties and less political tension with China.
Taiwan markets surged the first trading day after a victory
by Ma Ying-jeou of the more China-friendly Nationalist Party,
or Kuomintang (KMT), boosting hopes for a greater flow of
tourists, trade and capital between Taiwan and China.
Taiwan's main TAIEX <> jumped more than 6 percent at
the open -- its biggest one-day percentage gain in more than
seven years -- before easing back to a gain of 4 percent.
Activity was subdued in Asia as markets in many parts of
the region were closed for the Easter holiday.
MSCI's index of shares outside Japan <.MSCIAPJ> rose 1.3
percent, although it is still down 18 percent so far this
year.
Tokyo's Nikkei index <> traded in and out of the red
to end the session flat. Investors were braced for the upcoming
corporate results season.
(Reporting by Herbert Lash. Editing by Richard Satran)
