* Global efforts to stabilize banks calm markets
* Dow, S&P 500, Nasdaq all up more than 4 percent
* Morgan Stanley jumps after news of stake purchase
* GM rises on news it had merger talks with Chrysler
(Update to early morning, adds byline)
By Ellis Mnyandu
NEW YORK, Oct 13 (Reuters) - U.S. stocks soared on Monday
as a global push by governments to pump cash into banks fueled
a rebound in financial shares and credit markets showed some
signs of loosening up.
Governments, including those of Germany and France, stepped
up efforts to restore confidence in the tottering banking
system by offering multibillion-dollar bank rescues after
weekend talks in Washington.
Morgan Stanley <MS.N> was among the standouts: its shares
soared more than 50 percent after Japan's Mitsubishi UFJ
Financial Group <8306.T> said it paid $9 billion for a 21
percent stake in the beaten-down U.S. securities firm that has
turned itself into a bank holding company. For details see
[].
Shares of Wachovia <WB.N> rose nearly 6 percent after the
U.S. Federal Reserve approved the $12.46 billion purchase of
the beleaguered U.S. bank by Wells Fargo & Co <WFC.N>.
The S&P financial index <.GSPF> rose 4.1 percent.
"It's clearly an oversold bounce, but also with any luck,
it allows us to move past this hour-to-hour and day-to-day
time-frame to tackle longer-term issues over the next few
quarters," said Jack Ablin, chief investment officer at Harris
Private Bank in Chicago. "Sometime last week it seemed like we
faced Armageddon, so to have a coordinated plan on stabilizing
banks is huge progress."
The Dow Jones industrial average <> jumped 436.31
points, or 5.16 percent, to 8,887.50. The Standard & Poor's 500
Index <.SPX> gained 48.96 points, or 5.44 percent, to 948.18.
The Nasdaq Composite Index <> shot up 91.01 points, or
5.52 percent, to 1,740.52.
Wall Street capped its worst week ever on Friday as
investors feared the credit crisis was spiraling out of control
and the global economy was threatened by deep recession.
Stock markets leaped in Asia overnight and again in Europe,
where the FTSEurofirst 300 <>, an index of leading
European shares, shot up more than 7 percent.
In an unprecedented move, Britain said it would spend up to
$64 billion to buy into top UK banks, and Germany and France
drew up similar steps. U.S. Treasury Secretary Henry Paulson
said Washington was developing plans to buy equity in financial
institutions to halt the prolonged financial market turmoil.
Morgan Stanley shares vaulted 54.3 percent to $14.94 on the
New York Stock Exchange, while those of Wachovia rose 5.4
percent to $5.43.
The optimism over bank rescues, however, collided with a
U.S. bank sector downgrade by Citigroup, which contributed to
declines in other bank shares, including JPMorgan <JPM.N>, off
2.7 percent at $40.51.
On Nasdaq, shares of Apple Inc <AAPL.O> led advancers, with
a gain of 7.2 percent to $103.79. Citigroup raised its
recommendation on the U.S. technology hardware and equipment
sector to "market weight" from "underweight."
U.S. trading was 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.
Shares of General Motors <GM.N> climbed 26 percent to $6.17
following news that the automaker has held merger talks with
Chrysler LLC and rival Ford Motor Co <F.N>, whose shares were
up 25 percent at $2.51. [].
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)
