* Global efforts to pump cash into banks buoy markets
* Morgan Stanley jumps as Japanese deal calms nerves
* Credit markets show signs of loosening up
* GM up on news it has had merger talks with Chrysler
(Recasts first paragraph, updates prices)
By Ellis Mnyandu
NEW YORK, Oct 13 (Reuters) - U.S. stocks headed for a
sharply higher open on Monday as a push by governments around
the world to pump money into the clogged banking system sparked
relief among investors and credit markets showed signs of
loosening up.
Stock markets leaped in Asia overnight and again in Europe,
where the FTSEurofirst 300 <>, an index of leading
European shares, shot up more than 6 percent. Benchmark U.S.
indexes were poised to open up 4 percent or more after Wall
Street capped its worst week ever on Friday.
Governments stepped up efforts to restore confidence in the
tottering banking system by providing multibillion-dollar bank
bailouts following weekend talks in Washington.
"The global markets are giving a nod of approval to what
the governments, central banks and the U.S. Treasury are doing
to boost confidence in the market place," said Peter Cardillo,
chief market economist at Avalon Partners in New York.
"What we could see is a market that begins to stabilize.
Obviously there's some questions about the plans. Are we going
too far? Are we all becoming socialist? But the bottom line:
the market needed to get some concrete plan and I think finally
we've gotten something that's going to restore confidence."
S&P 500 futures <SPc1> rose 47.50 points and were above
fair value, a formula that evaluates pricing by taking into
account interest rates, dividends and time to expiration on the
contract.
Dow Jones industrial average futures <DJc1> jumped 348
points and Nasdaq 100 <NDc1> futures climbed 57.75 points. At
their peak on Monday, the S&P 500 futures registered their
biggest advance since Sept. 19 when Washington announced plans
for a $700 billion bailout to mop up bad mortgage debts from
banks' books.
U.S. trading was likely to be light, however, with the U.S.
bond market closed for the Columbus Day holiday. Japanese
markets were also closed for a national holiday on Monday.
Britain said it would spend up to $64 billion buying into
top UK banks and Germany and France have drawn up similar
steps. In the United States, Treasury Secretary Henry Paulson
said Washington was developing plans to buy equity in financial
institutions to halt the prolonged market turmoil.
Before the bell, the Financial Select Sector SPDR <XLF.A>,
an exchange-traded fund which tracks the performance of the
Standard & Poor's 500 financials group, jumped 4.6 percent.
Shares of Morgan Stanley <MS.N> rose 33 percent to $12.90
before the bell after Japan's Mitsubishi UFJ Financial Group
<8306.T> announced it had bought a $9 billion stake in the
beaten-down securities firm that has now turned into a bank
holding company. For details see [].
Spain's Banco Santander <SAN.MC> is in advanced talks to
buy full control of Sovereign Bancorp Inc <SOV.N> in a deal
valued at $2.5 billion, according to a source familiar with the
matter. Before the bell, Sovereign Bancorp shares jumped more
than 10 percent to $4.20.
Shares of General Motors <GM.N> climbed more than 17
percent to $5.75 following news that the automaker has held
merger talks with Chrysler LLC. []
In a sign that credit markets may be loosening up, the cost
for banks to borrow dollars, sterling and euros from each other
over three months fell. []
(Editing by James Dalgleish)
