* Global efforts to stabilize banks calm markets
* Morgan Stanley jumps after news of stake purchase
* GM rises on news it had merger talks with Chrysler
* Dow up 11.1 pct, S&P up 11.6 pct, Nasdaq up 11.8 percent
(Updates to close)
By Kristina Cooke
NEW YORK, Oct 13 (Reuters) - Wall Street roared back from
its worst week ever with one of its best single days ever on
Monday, as governments pledged to pour cash into struggling
banks to restore confidence in a rocky global financial
system.
Bargain-hunting investors scoured the wreckage from eight
days of losses that had whacked more than 20 percent off the
value of the benchmark S&P 500. Health care, utility and
energy stocks rose the most in what was the first day of gains
this month for the Dow and S&P 500.
Morgan Stanley <MS.N> drove the rally in financial shares,
soaring 87 percent, after Mitsubishi UFJ Financial
Group completed its $9 billion investment in the U.S. bank as
U.S. government support helped nail down a critical deal many
investors had feared could fall apart. Wachovia <WB.N> climbed
13.6 percent after the Federal Reserve approved the $12.46
billion takeover of the U.S. bank by Wells Fargo & Co
<WFC.N>.
"The crucial issue for the market has been a lack of
confidence and the most recent efforts to ease the credit
crunch by governments and central banks have been very
positive in terms of building confidence," said Subodh Kumar,
chief investment strategist at Subodh Kumar & Associates in
Toronto.
Led by Britain, European governments agreed to
multibillion-dollar guarantees for the banking system in moves
that may become a crucial test of investor faith in
government's ability to reverse the downward spiral.
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. The S&P
financial index <.GSPF> shot up 10.23 percent.
The Dow Jones industrial average <> rose 936.42
points, or 11.08 percent, to 9,387.61, its biggest one-day
point gain ever and its biggest percentage gain since March
15, 1933.
The Standard & Poor's 500 Index <.SPX> also notched its
best single-day point gain, up 104.13 points, or 11.58
percent, to 1,003.35. The Nasdaq Composite Index <> was
up 194.74 points, or 11.81 percent, at 1,844.25, its biggest
one-day point gain since January 2001.
General Motors <GM.N> jumped 33.1 percent to $6.51 after
reports that the automaker has been in merger talks with
rivals Chrysler LLC and Ford Motor Co <F.N>, whose shares
surged 20.1 percent to $2.39. [].
Defensive and consumer staples stocks rose as investors
picked up shares in companies generally considered better
positioned to weather an economic downturn. Johnson & Johnson
<JNJ.N> rose 12.2 percent to $62.68.
Among tech shares, Apple Inc <AAPL.O> was up 13.9 percent
at $110.26, after Citigroup raised its recommendation on the
U.S. technology hardware and equipment sector to "market
weight" from "underweight." Microsoft <MSFT.O> gained 18.6
percent to $25.50.
Energy companies tracked the price of oil higher. Crude
oil gained $3.49, or 4.49 percent, to settle at $81.19 a
barrel on optimism over the governments' moves to shore up
confidence in the banking system. Exxon Mobil <XOM.N> gained
17.2 percent to $73.08, and Chevron <CVX.N> climbed 20.9
percent to $69.89.
Morgan Stanley shares spiked 87 percent to $18.10, while
those of Wachovia rose 13.6 percent to $5.85.
In a sign that credit markets may be loosening up, the
cost for banks to borrow dollars, sterling and euros from each
other over three months fell. []. But the U.S.
Treasury market was closed for the Columbus Day holiday.
"We've had a nice snapback rally in stocks today as we got
that favorable piece of news about the investments in the
banks," said Bucky Hellwig, senior vice president at Morgan
Asset Management, in Birmingham, Alabama.
"But these gains, this momentum, may not be sustainable.
We'll see what happens tomorrow when the bond market
reopens."
Trading was moderate on the New York Stock Exchange, with
about 1.82 billion shares changing hands, below last year's
estimated daily average of roughly 1.90 billion, while on
Nasdaq, about 2.60 billion shares traded, above last year's
daily average of 2.17 billion.
Advancing stocks outnumbered declining ones by a ratio of
20 to 1 on the NYSE and by 7 to 1 on the Nasdaq.
(Reporting by Kristina Cooke; Editing by Jan Paschal)
