GLOBAL MARKETS-Risk appetite returns despite banking fears

                                
   * Government stimulus plans support global risk appetite
                                
* U.S. crude oil prices rally more than 10 pct
                                
* Wall St slides on banking fears following Lloyds' losses
                                
* Disappointing U.S. consumer mood also weighs on Wall St
                                
 By Walter Brandimarte
                                
 NEW YORK, Feb 13 (Reuters) - Hopes for the implementation
of government stimulus packages rekindled some global appetite
for risk on Friday, encouraging investors to move out of
safe-haven government bonds and gold, although Wall Street
slipped on renewed banking sector fears.
                                
 Oil prices rallied more than 10 percent, sending energy
stocks higher across the globe, but U.S. bank shares declined
after Britain's Lloyds Banking Group <LLOY.L> posted hefty
losses for 2008. For details, see [ID:nLD820935]
                                
 "There is speculation that we are going to see a larger
(U.S. government) package than we thought we were going to see,
including subsidies," said Thomas di Galoma, head of U.S.
Treasury trading at Jefferies & Co in New York.
                                
 Wall Street was also pressured, however, by a
bigger-than-expected fall in U.S. consumer confidence for
February, which sank back to November levels, according to a
Reuters/University of Michigan survey. [ID:nN13275765]
                                
 As a result, the main U.S. stock indexes seesawed for most
of the day, eventually ending lower in the last session before
a three-day holiday weekend.
                                
 The Dow Jones industrial average <.DJI> finished down 82.35
points, or 1.04 percent, at 7,850.41, while the Standard &
Poor's 500 Index <.SPX> lost 8.35 points, or 1.0 percent, at
826.84. The Nasdaq Composite Index <.IXIC> declined 7.35
points, or 0.48 percent, at 1,534.36.
                                
 "The banks are still a concern, plus we have a long weekend
coming up," said Peter Jankovskis, director of research at
OakBrook Investments LLC in Lisle, Illinois. "There are people
that may be deciding they want to be out of the market for a
few days.
                                
 Hopes for a substantial government stimulus package
supported sentiment in other markets, encouraging investors to
venture out of the relative safety of U.S. government bonds,
gold and the dollar.
                                
 The U.S. Senate was set to vote later on Friday on the
Obama administration's $787 billion economic package. The House
of Representatives earlier approved the package.
[ID:nN13486791]
                                
 A program to subsidize mortgages for U.S. homeowners is
also on the works in Washington, and should be unveiled by
President Barack Obama on Wednesday. [ID:nN13531431]
                                
 Prices of U.S. crude oil <CLc1> soared $3.53, or 10.39
percent higher, to settle at $37.51 per barrel.
                                
 U.S. benchmark 10-year Treasury notes <US10YT=RR> traded
28/32 lower in price for a yield of 2.89 percent. Spot gold
prices <XAU=> were at $937.80 an ounce, down 0.8 percent from
the last trade $945.05 late in New York on Thursday.
                                
 In Europe, the FTSEurofirst 300 index <.FTEU3> closed 0.61
percent higher at 796.50, even as Lloyds' shares plunged over
32 percent.
                                
 "The Lloyds statement has led to further devastation across
the banking sector. Activity and volumes are very thin today.
There is an air of quietness and it only takes one shock to
send it down," said Howard Wheeldon, strategist at BGC
Partners.
                                
 G7 MEETING EXPECTATIONS
                                
 Optimism about a U.S. mortgage subsidy program helped the
dollar gain 0.17 percent against a basket of major currencies,
according to the U.S. Dollar Index <.DXY>.
                                
 The greenback gained 1.19 percent against the yen <JPY=>,
at 91.95, also supported by expectations that the Group of
Seven finance ministers may single out the Japanese currency
for excessive strength at this weekend's meeting in Rome.
                                
 But the euro was near flat against the dollar, at $1.2863,
after three consecutive sessions of losses, as investors
squared positions ahead of the G7 meeting.
                                
 The European currency mostly shrugged off a report showing
the euro zone economy had its deepest contraction on record in
the fourth quarter of 2008, increasing the likelihood of
interest rate cuts by the European Central Bank.
                                
 Emerging equity markets also benefited from an increased
appetite for risk. The MSCI stock index for the asset class
<.MSCIEF> jumped 2.1 percent while yield spreads between
emerging-market bonds and U.S. Treasuries tightened 18 basis
points to 660 basis points on the benchmark JPMorgan EMBI+
index <11EMJ>.
 (Additional reporting by Chris Reese and Gertrude
Chavez-Dreyfuss in New York, Joanne Frearson in London; editing
by Gary Crosse)