* Equities up on economic stimulus plans
* Bond yields rise, U.S. dollar slips
* US automakers bailout hopes also help
By Jeremy Gaunt and Chuck Mikolajczak
LONDON/NEW YORK, Dec 8 (Reuters) - Stock markets around the
world rebounded on Monday, helped by several governments
reinforcing their plans for countering the global economic
crisis and by signs the U.S. was close to providing emergency
finance for its automakers.
Bond yields rose as a result and the U.S. dollar slipped as
the need for a safe haven diminished.
There's "some chance" that equities markets made a bottom
on Nov. 21, Bob Doll, global chief investment officer for
equities at fund manager, BlackRock <BLK.N>, told Reuters.
"I think we've broken the downtrend and gone sideways," he
said.
European Union leaders met to discuss proposals to give the
eurozone ecomomy a 200 billion euro boost, India announced a $4
bln spending package, and U.S. President-elect Obama reiterated
his plan for a massive public works program over the weekend.
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In the U.S. the Dow Jones industrial average <> was up
2.65 percent at 8,865.325 at midday, while the Standard &
Poor's 500 Index <.SPX> was up 2.59 percent at 898.78, and the
Nasdaq Composite Index <> was 3.23 percent higher at
1,558.04
The advance pushed the S&P 500 index into positive
territory for the month and extended the index's recovery since
it hit an 11-year low on Nov 21. The index is up 20 percent
since Nov. 21 but remains 38.6 percent lower on the year.
Companies associated with large construction projects, such
as Dow component Caterpillar <CAT.N> were among the top
gainers. Shares of Caterpillar, a maker of construction and
mining equipment, climbed over 14 percent to $43.66 on the New
York Stock Exchange.
"Look at the sectors that are working, anything
infrastructure-related is getting a lift," said Kevin
Kruszenski, head of listed trading at KeyBanc Capital Markets
in Cleveland. "Definitely the people who make 'stuff' is on the
on the upside."
Signals that the three U.S. automakers -- General Motors
<GM.N>, Ford <F.N> and Chrysler -- were closer to procuring a
financial lifeline from the government to stave off possible
bankruptcy also boosted investor sentiment. Both GM and Ford
soared over 14 percent.
The FTSEurofirst 300 <> index of top European shares
closed 6.9 percent higher at 848.48 points.
The Morgan Stanley Capital World Stock Index
<.MIWD00000PUS> was up 5.1 percent at midday in New York.
BOND YIELDS RISE
U.S. Treasuries prices fell on Monday as global stock
market gains drew investors into riskier assets and away from
safe-haven U.S. government debt.
Benchmark 10-year Treasury notes <US10YT=RR> were down
5/32 around midday on Monday, yielding around 2.73 percent.
The Fed is expected to cut the federal funds rate by 50
basis points to 0.5 percent at its policy meeting next week,
according to a Reuters poll, but huge amounts of new Treasuries
are expected to be issued to help pay for the U.S. bailout of
the banking system and the economy.
In Europe, the 10-year Bunds <EU10YT=RR> yielded 3.145
percent, up 12 basis points on the day and well off Thursday's
low of 2.939 percent, the lowest in over 30 years.
"Bonds have had such a phenomenal rally that it just needs
stability in stocks to make them backtrack," said Steve Barrow
at Standard Bank.
US DOLLAR SLIPS
The U.S. dollar fell against the euro and most other major
currencies on Monday as talk of an imminent bailout deal for
the three U.S. automakers boosted stocks around the world and
helped to ease risk aversion.
The rise in benchmark world stock indexes sent the
low-yielding Japanese yen and U.S. dollar lower against the
Australian dollar, sterling, and other currencies offering
higher interest rates but also higher risk.
Midway through the New York session, the euro <EUR=> traded
1.7 percent higher at $1.2947, after jumping as high as
$1.2954, its highest level since November 28.
The euro <EURJPY=> also rose 1.6 percent to 120.20 yen,
having climbed as high as 120.99 yen, according to Reuters
data, as the euro was boosted by higher regional shares.
Against the yen, the U.S. dollar <JPY=> traded 0.1 percent
higher at 92.93 yen, but well off the session high of 93.91
yen.
"The central banks have done their job and now the focus is
on governments -- in addition to Obama's plan we have stimulus
packages from India, Australia and China," said Thierry Lacraz,
strategist at Pictet in Geneva. "While this will not avoid a
recession, investors at least have the feeling that the people
in charge are doing the right thing."
(Additional reporting by Ellen Freilich and Nick Olivari in
New York, and Sarah Marsh and Ian Chua in London)
