* Global stocks rally after last week's dramatic rout
* Oil rises from 13-month low; many commodities recover
* Euro soars as European governments approve bank rescues
(Adds close of European markets)
By Herbert Lash
NEW YORK, Oct 13 (Reuters) - Global stocks soared in their
biggest one-day advance in at least 20 years on Monday while
oil prices jumped after European governments took bold steps to
restore market confidence and avert a worldwide recession.
U.S. stocks were headed for their biggest percentage gain
in a single day since two days after the Black Monday crash of
October 1987, and the FTSEurofirst 300 <> index of top
European shares surged by a record 10 percent.
Crude oil jumped along with other commodities and euro zone
government debt prices fell as the European rescue packages --
which are designed to shake the global financial crisis out of
a deep credit freeze -- took away a flight to safety bid.
Britain, Germany, France, Italy and other European
governments pledged hundreds of billions of dollars to boost
flagging confidence in the world's creaking financial system.
The U.S. Federal Reserve, the European Central Bank, the
Bank of England and the Swiss National Bank also said they
would lend commercial banks as much U.S. dollar liquidity as
they needed to ease clogged interbank lending rates.
With luck the European measures will help stop investors
from framing decisions on an hour-by-hour basis and form
longer-term outlooks, 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," Ablin said. But "it's clearly an oversold bounce."
MSCI's all country world index <.MIWD00000PUS> surged more
than 7 percent, its biggest one-day percentage gain in at least
two decades.
The Dow Jones industrial average <> rose 579.52 points,
or 6.86 percent, at 9,030.71. The Standard & Poor's 500 Index
<.SPX> was up 64.17 points, or 7.14 percent, at 963.39. The
Nasdaq Composite Index <> was up 120.26 points, or 7.29
percent, at 1,769.77.
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.
Battered financial stocks were among the biggest gainers on
both sides of the Atlantic.
Morgan Stanley <MS.N> vaulted 75 percent after Japan's
Mitsubishi UFJ Financial Group <8306.T> said it would go ahead
with its plan to pay $9 billion for a 21 percent stake in the
former investment bank, now a bank holding company.
In Europe, Swiss CS Group <CSGN.VX> rose 28 percent, Dutch
ING Group <ING.AS> climbed 27 percent, Swiss Re <RUKN.VX> rose
21.6 percent and Standard Life <SL.L> advanced 20.5 percent.
Shares of General Motors <GM.N> climbed almost 33 percent
following news that the company -- the largest U.S. automaker
-- had held merger talks with rivals Chrysler LLC and Ford
Motor Co <F.N>. Ford's shares rose 25 percent.
The FTSEurofirst 300 <> index of top European shares
closed 10.1 percent higher at 937.41.
In Britain shares of banks taking part in the bailout --
notably HBOS <HBOS.L>, Lloyds TSB <LLOY.L> and Royal Bank of
Scotland <RBS.L> -- fall sharply. HBOS fell 27.5 percent,
Lloyds TSB sank 14.5 percent and RBS lost 8.4 percent.
Gold at first rose as the dollar slipped, lifting its
appeal as an alternative investment, but later fell, while
commodities recovered broadly after Friday's rout, with
industrial metals, sugar, grains and coffee all rising.
Analysts said Europe's bold steps, which many said eclipsed
weekend pledges by ministers of the Group of Seven industrial
nations of action and coordination, should successfully tackle
the lending paralysis over time.
"It's enough to get these money markets up and running
again," said David Keeble, head of rates strategy at Calyon in
London. "But it might take a few weeks to get it filtering
through to the coal face, as it were," he said.
The euro surged as much as 1.8 percent from a 1-1/2-year
low against the dollar, and the interbank cost of borrowing in
sterling, euros and dollars fell as confidence in money markets
showed signs of returning.
The euro <EUR=> rose 0.64 percent at $1.3498.
The dollar rose against a basket of major currencies, with
the U.S. Dollar Index <.DXY> up 0.14 percent at 81.892. Against
the yen, the dollar <JPY=> rose 0.41 percent at 101.05.
U.S. light sweet crude oil <CLc1> rose $3.66 to $81.36 a
barrel.
Spot gold prices <XAU=> fell $8.80 to $838.60 an ounce.
Asian stocks jumped over 7 percent, according to MSCI's
index of Asia-Pacific stocks outside Japan <.MIAPJ0000PUS>,
after tanking more than 20 percent last week to the lowest
since December 2004.
Japanese markets were closed for a holiday and the U.S.
Treasury market was also closed, for the Columbus Day holiday.
(Reporting by Ellis Mnyandu and Steven C. Johnson in New York;
Jamie McGeever, Jane Merriman, Emelia Sithole-Matarise and Jan
Harvey in London and Peter Starck in Frankfurt; Writing by
Herbert Lash; Editing by James Dalgleish)
