* Equities up on economic stimulus plans
* Bond yields rise, U.S. dollar slips
* US automakers bailout hopes also help
By Jeremy Gaunt and Leah Schnurr
LONDON/NEW YORK, Dec 8 (Reuters) - Stock markets around the
world rebounded on Monday, helped by governments reinforcing
their plans for countering the global economic crisis.
Bond yields rose as a result and the U.S. dollar slipped as
the need for a safe haven diminished.
"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 the Swiss private bank 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."
U.S. stocks rallied on optimism that President-elect Barack
Obama's plan to invest in a massive infrastructure plan will
bolster the economy and on hopes for a rescue plan for U.S.
automakers.
Over the weekend, Obama outlined plans for the largest
infrastructure investment since the 1950s in a bid to create at
least 2.5 million jobs by 2011. For details, see
[].
"It's something tangible that really hasn't been talked
about previously," said Bucky Hellwig, senior vice president at
Morgan Asset Management in Birmingham, Alabama. "It has a
direct impact on a lot of sectors in the market that have
gotten oversold."
Companies tied to large construction projects helped fuel
the second day of gains in a row, including Dow component
Caterpillar <CAT.N>, which was up 12.5 percent at $43.03.
Shares in industrial, energy and materials companies also
benefited, and an advance in commodities, including oil, lifted
stocks related to resources.
The Dow Jones industrial average <> climbed 281.95
points, or 3.27 percent, to 8,917.37. The Standard & Poor's 500
Index <.SPX> rose 32.52 points, or 3.71 percent, to 908.59. The
Nasdaq Composite Index <> ended up 62.43 points, or 4.14
percent, at 1,571.74.
Investors were also hopeful that a financial lifeline for
ailing U.S. automakers could be imminent, buoying sentiment.
Shares of General Motors <GM.N> jumped 16.7 percent to $4.76
and Ford <F.N> surged 23.2 percent to $3.35.
The market's advance saw the broad S&P 500 extend its
recovery since it hit an 11-year low on Nov 21. The index is up
more than 20 percent since Nov. 21.
European Union leaders met to discuss proposals to give the
eurozone ecomomy a 200 billion euro boost, while India
announced a $4 bln spending package. [].
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> rose 5.74 percent to 220.97.
BOND YIELDS RISE
U.S. Treasury yields edged up as global stock market gains
and heavy issuance due this week offset concerns about a
protracted recession, reining in the bid for the safety of
government debt, after yields fell to 50 year lows last week.
The price on benchmark 10-year Treasuries <US10YT=RR> fell
down 6/32 at 108-24/32 for a yield around 2.74 percent, up from
2.71 percent late on Friday.
The Federal Reserve 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 in London.
US DOLLAR SLIPS
The U.S. dollar fell on Monday as President-elect Barack
Obama's plan for massive infrastructure spending lifted global
stock markets, spurring investors to reduce holdings of
safe-haven dollars and take on more risk.
The euro rose 1.6 percent to $1.2940 <EUR=>, its best daily
gain in two weeks.
"With the news that a very large fiscal stimulus package is
being planned by the Obama administration, investors are
starting to anticipate less bad news in 2009, and that has
generated a pop in risk appetite," said Robert Blake, senior
currency strategist at State Street Global Markets in Boston.
The equities rally also benefited the pound, which gained
1.0 percent against the dollar to $1.4910 <GBP=>, while the
dollar fell 1.2 percent to 1.2049 Swiss francs <CHF=>.
COMMODITIES
U.S. crude oil futures ended higher on Monday, snapping a
six-session losing streak, as hopes for more economic stimulus
lifted global equities and after Saudi Arabia said it would cut
supply further.
On the New York Mercantile Exchange, January crude <CLF9>
settled up $2.90, or 7.11 percent, at $43.71 a barrel.
Gold prices also surged boosted by a lower U.S. dollar and
investor concern about the large amounts of money being pumped
into the global economy.
Spot gold <XAU=> was at $773.60 at 2:35 p.m. EST (1935
GMT), up 2.6 percent from Friday's close of $754.60.
(Additional reporting by Ellen Freilich, Steve Johnson and
Gene Ramos in New York, and Sarah Marsh and Ian Chua in
London)
