* Bank bailout plans buoy investor sentiment
* European shares up 4 percent, Japan 14 percent
* Investors sell yen, government bonds
By Jeremy Gaunt, European Investment Correspondent
LONDON, Oct 14 (Reuters) - Global investors piled into
equities for the second day in a row on Tuesday, dumping
relatively safer assets as they took comfort from concerted
efforts by governments to shore up the financial system.
Much of the trading was unwinding panic moves from last week
when fears about the worst financial crisis in nearly 80 years
swept across the world.
European shares were following Asia sharply higher, rising
around 4 percent. Japan's Nikkei <>, which was not traded
on Monday because of a holiday, gained more than 14 percent.
MSCI's main world stock index <.MIWD00000PUS> was up more
than 3 percent, gaining more than 12 percent for the week to
date after plunging 20 percent last week.
Its emerging market stock counterpart (.MSCIEF> was up 5.2
percent, adding to Monday's 7.4 percent gain.
Investments seen recently as relatively safe compared with
stocks -- the Japanese yen and government bonds -- fell.
"There's relief that banks probably won't go bankrupt thanks
to the capital injection plans," said Koichi Ogawa, chief
portfolio manager at Daiwa SB Investments in Japan.
The United States will announce plans later in the day to
inject $250 billion into its banks, following similar moves by
Britain, France, Germany and others on Monday.
Japan also joined the global push, saying it could inject
public funds into regional banks to make sure small firms can
get cash. []
The pan-European FTSEurofirst 300 index was up 4 percent
points after its strongest one-day percentage rise on record --
10.1 percent -- on Monday.
"Market players are hoping that the crisis has reached a
turnaround point thanks to the extensive aid programmes," German
bank Helaba said in a note.
Banks were the top weighted gainers.
Earlier, Japan's benchmark Nikkei surged 14.2 percent or
1,171.14 points to 9,447.57. The broader Topix <> gained
13.7 percent to 956.30.
Some analysts warned, however, that once the relief about
the financial system had played through, the declining state of
the world economy remained.
"We will inevitably enter a phase of thinking about how the
steps will actually impact the global economy," said Daiwa SB
Investments' Ogawa.
UNWINDING
The yen fell against both the euro and dollar.
"The yen had been bought due to risk aversion, but such
moves are likely to subside for now," said Hiroshi Yoshida, a
currency trader at Shinkin Central Bank.
The euro rose 0.8 percent against the yen compared to late
U.S. trading on Monday, and stood at 139.72 yen <EURJPY=R>,
having rebounded off a three-year low of 132.15 yen hit on
trading platform EBS on Friday.
The dollar was up 0.3 percent at 102.29 yen <JPY=>.
On government bond markets, euro zone debt prices fell as
investors old.
Two-year Schatz yields <EU2YT=RR> climbed 6 basis points to
3.236 percent, while 10-year Bund yielded <EU10YT=RR> 4.092
percent, up about 1 basis points.
