* 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
(Adds close of European markets, updates pricings)
By Herbert Lash
NEW YORK, Sept 22 (Reuters) - A chorus of concern about the
cost and lack of details about the U.S. government's $700
billion bailout of troubled banks dragged down global stocks,
government debt and the dollar on Monday and drove up the price
of gold.
U.S. gold futures jumped nearly 4 percent on safe-haven
buying as analyst after analyst worried about the final shape
of the bailout plan, with U.S. lawmakers calling for changes
from the Treasury Department's proposal.
Euro zone government bonds hit a six-week low, extending
losses from late last week, and U.S. Treasuries also fell as
investors fretted the plan would require more U.S. government
debt issuance, boosting the yield on longer-dated debt.
Crude oil rose more than $3 a barrel as investors and
traders in the oil market took a different view of the bailout
plan, driving optimism it will stabilize the U.S. economy.
Uncertainty about the bailout plan drove down the shares of
leading European companies and Wall Street more than 2 percent,
and analysts said they could not gauge the ultimate cost and
form of the plan.
"It's just too big to analyze on a one-day view," said John
Haynes, strategist at Rensburg Sheppards. "The Fed, I think, is
going to win in the end, but as to whether stocks go up or down
in the next three months, it's the toss of a coin."
While investors hoped the plan will resolve a year-long
credit crisis that has begun to be felt on Main Street, its
size and cost sparked widespread concerns.
"There is too much unknown," said Peter Mueller, interest
rate strategist at Commerzbank. "The big question is what will
be the price?"
As has been the case whenever investors have worried about
the impact of the credit crisis, banks were the big losers on
both sides of the Atlantic. Five major U.S. banks were the
biggest drag on the benchmark S&P 500, led by shares of
JPMorgan Chase <JPM.N>, which fell almost 10 percent.
Before 1 p.m., the Dow Jones industrial average <> was
down 185.81 points, or 1.63 percent, at 11,202.63. The Standard
& Poor's 500 Index <.SPX> was down 23.99 points, or 1.91
percent, at 1,231.09. The Nasdaq Composite Index <> was
down 45.14 points, or 1.99 percent, at 2,228.76.
HSBC <HSBA.L>, Europe's biggest bank, fell 5.8 percent and
was the biggest drop on the pan-European FTSEurofirst 300
<> index of top European shares.
Shares in Holcim <HOLN.VX>, the world's second largest
cement maker, were among the top losers in Europe, falling 18
percent after Russian cement maker Eurocement took a 6.5
percent stake. Eurocement said it did not intend to bid for the
Swiss group.
The U.S. dollar hit fresh three-week lows against the euro,
weighed down by concerns about the budgetary impact of the U.S.
bailout plan.
The euro <EUR=> rose as high as $1.4660 versus the dollar,
the highest since Sept. 1, according to Reuters Dealing.
"Nobody knows what form the bailout package will take,"
said Ron Simpson, director of currency research at Action
Economics in Tampa, Florida.
"We only know vaguely how much it will cost. So if you are
a foreigner and looking at the U.S. fiscal position it does not
look pretty for this year and next."
The euro <EUR=> rose 1.82 percent at $1.4727.
The dollar fell against major currencies, with the U.S.
Dollar Index <.DXY> off 1.31 percent at 76.559. Against the
yen, the dollar <JPY=> fell 1.11 percent at 106.23.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
21/32 to yield 3.90 percent. The 30-year U.S. Treasury
bond<US30YT=RR> shed 44/32 to yield 4.47 percent.
U.S. light sweet crude oil <CLc1> rose $5.91 to $110.46 a
barrel.
"The key driver continues to be the U.S. rescue package
which has changed the sentiment in the oil market," said Bank
of Ireland analyst Paul Harris.
"Oil had fallen back below $100 a barrel last week on
demand worries, but the package has gone some way to easing
those concerns. However, I don't think there is enough clarity
yet to see prices go significantly higher."
News that China increased crude imports by 11.54 percent in
August over a year earlier also supported oil prices. And
industry sources on Monday said that top oil exporter Saudi
Arabia has trimmed oil supplies to international major and U.S.
refiners since the start of September.
Spot gold prices <XAU=> rose $27.45 to $898.60.
Asian stocks climbed overnight. Japan's Nikkei share
average <> closed up 1.4 percent, after hitting a
three-year low last week.
Outside of Japan, stocks in the Asia-Pacific region were up
2.4 percent, bouncing further from a two-year low plumbed on
Thursday, according to an MSCI index <.MIAPJ0000PUS>.
(Reporting by Kristina Cooke, Richard Leong, Gertrude
Chavez-Dreyfuss and Nick Olivari in New York, and Joe Brock,
Jan Harvey and Sitaraman Shankar London; Writing by Herbert
Lash, Editing by Leslie Adler)
