* Stocks surge after U.S. government bails out Citigroup
* Govt debt prices fall but yields close to historic lows
* Oil rises above $54 a barrel in anticipation of OPEC cut
* Dollar falls vs euro, sterling as risk aversion cools
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, Nov 24 (Reuters) - U.S. stocks advanced broadly
on Monday and government debt prices slid after Washington's
rescue of Citigroup eased investors' fears that its collapse
could push the global financial system into the abyss.
Oil jumped 9 percent to over $54 a barrel as the dollar
weakened and on expectations that members of the Organization
of Petroleum Exporting Countries will cut output further.
The Dow and S&P 500 posted their biggest two-day gains
since the October 1987 crash, led by Citigroup's <C.N> 58
percent surge. The rally was broad, with gainers on the New
York Stock Exchange outnumbering decliners by more than 7 to
1.
The euro and sterling extended gains against the dollar as
risk aversion ebbed after the U.S. government agreed late
Sunday to inject $20 billion of new capital into Citigroup.
The $300 billion-plus rescue package for Citigroup spurred
broad equity rallies on both sides of the Atlantic, outweighing
another batch of gloomy economic news that has hammered
financial markets in recent weeks.
German corporate sentiment plunged to its lowest in nearly
16 years in November, an Ifo survey showed, while the pace of
existing U.S. homes sales fell 3.1 percent in October and the
median home price dropped to its lowest in more than four
years, a National Association of Realtors report showed.
The Citigroup news lifted the battered financial sector,
with the S&P Financial index <.GSPF> soaring almost 19 percent,
and an index of home builders <.DJUSHB> rose 16.6 percent, its
biggest one-day gain since Bear Stearns collapsed in March.
"The news on Citigroup is about confidence," said Cummins
Catherwood, managing director at financial services firm
Boenning & Scattergood in West Conshohocken, Pennsylvania.
"There's not a master stroke that's going to make everybody
come out and be happy again. Confidence is a mosaic that has to
be put up piece by piece and the Citi plan is just one piece."
Citigroup's rescue followed the disappearance this year of
major Wall Street firms Bear Stearns Cos and Lehman Brothers
Holdings Inc <LEHMQ.PK>, as well as the failure of Washington
Mutual Inc <WAMUQ.PK>, the largest U.S. savings and loan.
JPMorgan Chase <JPM.N> and Bank of America <BAC.N> were
other big gainers on the Dow, with JPMorgan rising 21 percent
and Bank of America up 27 percent.
The Dow Jones industrial average <> closed up 396.97
points, or 4.93 percent, at 8,443.39. The Standard & Poor's 500
Index <.SPX> jumped 51.78 points, or 6.47 percent, at 851.81.
The Nasdaq Composite Index <> climbed 87.67 points, or
6.33 percent, at 1,472.02.
European shares also raced higher on the Citigroup bailout,
with the FTSEurofirst 300 <> index of top European shares
rising 8.9 percent to close at 828.63.
Energy stocks were the top contributors to the index's
rise, with BP <BP.L> up 11 percent, Total <TOTF.PA> up 12.5
percent and Royal Dutch Shell <RDSa.L> up nearly 14 percent.
Miners tracked higher metals prices. BHP Billiton <BLT.L>
surged 22.9 percent, Anglo American <AAL.L> jumped 22.8 percent
and Rio Tinto <RIO.L> climbed 18.1 percent.
However, yields of U.S. and European short-term government
debt remained not far off record lows and gold prices shot
higher as unease persisted about the depth of the credit crisis
and global economic downturn.
"Another weekend, another bailout which seems to have
contributed to a knee-jerk bounce in equities and unwinding of
some of the safe-haven bid in Treasuries," said Kim Rupert,
managing director, global fixed-income analysis with Action
Economics LLC in San Francisco.
U.S. stocks pared some gains after President-elect Barack
Obama, who named the team of officials who will steer his
administration's economic policy, did not offer any new details
about his plans to combat the slumping U.S. economy.
Wall Street later surged anew.
U.S. crude <CLc1> rose $4.57 to settle at $54.50 a barrel,
while Brent crude <LCOc1> settled up $4.74 at $53.93.
"Today's move is signaling a shift away from the dominant
bear momentum and should begin attracting dip-buyers for a run
to $60 this week," Michael Vassar, analyst at 4castweb.com,
said about the crude oil market.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
27/32 in price to yield 3.34 percent. The 2-year U.S. Treasury
note <US2YT=RR> shed 6/32 in price to yield 1.22 percent.
The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> off 1.82 percent at 85.861.
Against the yen, the dollar <JPY=> rose 1.24 percent at 97.05.
The euro <EUR=> gained 2.63 percent at $1.2909.
"The forex market continues to be all about risk appetite
and its proxy, equities," said Dustin Reid, director of FX
strategy at RBS Global Banking & Markets in Chicago.
U.S. gold futures closed 3.5 percent higher after the
government's $20 billion injection of fresh capital and massive
loss guarantees for Citigroup stirred inflation worries.
The December gold contract <GCZ8> settled up $27.70 to
$819.50 an ounce in New York.
Overnight the MSCI index of Asia-Pacific stocks excluding
Japan <.MIAPJ0000PUS> briefly posted a small gain after the
Citigroup news, but was off 0.7 percent when Asian markets
closed. Japanese markets were closed for a public holiday.
(Reporting by Ellis Mnyandu, John Parry, Vivianne Rodrigues
and Frank Tang in New York, and Kirsten Donovan, Atul Prakash
and Alex Lawler in London; Writing by Herbert Lash; Editing by
James Dalgleish)
