* Global stocks fall amid concerns about U.S. bailout plan
* Dollar drops against euro, yen, fueling buying of gold
* Government debt falls on concerns about size of plan
* Oil rises on weaker dollar, trimmed Saudi crude output
(Recasts with U.S. markets, adds byline; changes dateline;
previous LONDON)
By Herbert Lash
NEW YORK, Sept 22 (Reuters) - U.S. stocks, bonds and the
dollar fell on Monday as investors questioned the impact the
U.S. government's $700 billion bailout for troubled banks would
have on the country's economy and already strained budget.
The dollar weakened broadly as skeptical investors tried to
sort out the details of the rescue plan, while government debt
prices in the euro zone and the United States extended losses
due to concerns about the how much this would cost Washington.
Congress would need to increase the U.S. government's debt
limit to $11.3 trillion from $10.6 trillion.
Gold was higher in early New York trade, climbing during
the European session as the dollar weakened and concern about
the success of the U.S. financial bailout plan spread.
U.S. crude oil futures rose as a weaker dollar and trimmed
output from Saudi Arabia helped extend oil's rally late last
week, even after a more than 6 percent jump on Friday. U.S.
light sweet crude oil <CLc1> rose $3.52 to $108.07 a barrel.
In the European stock market, banks shares gained and
helped the overall stock market higher after Japan's biggest
bank Mitsubishi UFJ Financial said it planned to buy 10 percent
to 20 percent of the common stock of Morgan Stanley. The Wall
Street firm is abandoning its investment bank model and
becoming a bank holding company.
But European shares turned lower after Wall Street opened,
"The U.S. plan has calmed nerves, but I don't think people
believe it will take out all the problems yet," said Standard
Bank analyst Walter de Wet. "Details are still sketchy. We need
to see when and how the plan the will be implemented."
An hour after opening, the Dow Jones industrial average
<> was off 124.72 points, or 1.10 percent, at 11,263.72.
The Standard & Poor's 500 Index <.SPX> fell 19.02 points, or
1.52 percent, to 1,236.06. The Nasdaq Composite Index <>
shed 29.57 points, or 1.30 percent, to 2,244.33.
Bank stocks led the way down on the S&P 500 and the Dow,
while IPod-maker Apple <AAPL.O> was the top drag on the Nasdaq,
after its price target was cut by Morgan Stanley.
In the government bond market, the benchmark 10-year U.S.
Treasury note <US10YT=RR> fell 12/32 to yield 3.86 percent. The
30-year U.S. Treasury bond <US30YT=RR> lost 30/32 to yield 4.44
percent.
The dollar fell against major currencies, with the U.S.
Dollar Index <.DXY> down 0.75 percent at 76.988. Against the
yen, the dollar <JPY=> fell 0.91 percent to 106.44.
The euro <EUR=> rose 1.07 percent to $1.4619.
Spot gold <XAU=> was trading at $889.75/$891.75, up from
$872.50/874.50 earlier in Europe and from $871.15 an ounce at
the nominal New York close on Friday.
(Reporting by Kristina Cooke, Richard Leong, Gertrude
Chavez-Dreyfuss in New York, and Jan Harvey and Sitaraman
Shankar London)
(Writing by Herbert Lash, Editing by Chizu Nomiyama)
