* China stimulus plan boosts equities, commodities
* Europe shares up 2.8 percent, Japan 5.8 percent
* Oil up 3.8 percent, copper 8 percent
* Bond yields rise. Yen retreats, euro gains
By Jeremy Gaunt, European Investment Correspondent
LONDON, Nov 10 (Reuters) - World stock and commodity markets
surged on Monday in reaction to China's plan to spend nearly
$600 billion on stimulating its economy as G20 finance ministers
pledged to do what is needed to revive financial markets.
Oil leapt 3.8 percent, gold rose 1.5 percent and London
copper 8 percent. Demand for government bonds fell along with
the rise in stocks, sending yields higher as investors found
equities more attractively priced.
"The China stimulus package has had a stabilising effect
near-term," said Ian Stannard, FX strategist ar BNP Paribas.
"But in the longer-term there remain concerns about the
global economy and the fact that China is needing to take such
drastic action."
China's official Xinhua news agency said on Sunday the
world's fourth-largest economy had approved 4 trillion yuan
($586 billion) in new government spending between now
and 2010, focused largely on infrastructure and social projects.
That is close to 18 percent of China's Gross Domestic
Product this year.
Equity markets jumped on the prospect for reflated growth.
The pan-European FTSEurofirst 300 <> was up 2.9
percent in early trading while Japan's Nikkei average <>
closed 5.8 percent higher.
Emerging market stocks as measured by MSCI <.MSCIEF> gained
3 percent, but some currencies inched lower on the back of cuts
in the debt ratings of a swathe of countries in the sector by
ratings agency Fitch.
"The profound shift in the global economic and financial
outlook poses significant real economy and policy challenges for
emerging markets," David Riley, head of Fitch's global sovereign
ratings group, said.
HIGHER YIELDS
Euro zone government bonds and U.S. Treasuries sold off.
The interest rate-sensitive two-year euro zone Schatz yield
<EU2YT=RR> was up 5 basis points at 2.454 percent, as was the
10-year Bund yield <EU10YT=RR> at 3.716 percent.
Glenn Maguire, Asia chief economist at Societe Generale,
said interest rate cuts, bigger government spending globally and
a likely recovery in corporate investment next year should sow
the seeds for an economic rebound.
"Economic activity can only accelerate. Beware of the doom
merchants," he said.
On foreign exchanges, the dollar retreated against the euro
and the low-yielding yen fell broadly.
The euro rose 0.8 percent against the dollar <EUR=> to
$1.2838.
The yen fell broadly, with the dollar <JPY=> up 0.7 percent
at 99.01yen and the euro jumping 1.4 percent to 127.19
<EURJPY=R>.
(Additional reporting by Jessica Mortimer)
