* European shares rise 1.4 pct; S&P 500 futures up 2.8 pct
* Citigroup surges in Frankfurt on U.S. toxic debt plan
* Dollar broadly weaker; crude oil above $52.5 a barrel
By Peter Starck
FRANKFURT, March 23 (Reuters) - Stock markets rallied on
Monday on news of a U.S. Treasury plan to buy up to $1 trillion
worth of toxic assets from banks, while the dollar and bonds
slid as the scheme restored some investor appetite for risk.
Futures <SPc1> for the U.S. benchmark S&P 500 index <.SPX>
rose more than 2.5 percent and the Frankfurt-listed shares
<TRV.F> of U.S. bank Citigroup <C.N> shot up more than 25
percent.
Details of the U.S. toxic debt plan, which emerged over the
weekend, extended a global stock market rally that has lasted
nearly two weeks on hopes that the financial system was
stabilising after some of the largest U.S. banks said they had
solid results in the first two months of the year.
Initially, the U.S. Treasury will pitch in with $75 billion
to $100 billion to launch the public-private partnerships,
taking the money from the $700 billion financial rescue fund
Congress approved in October, a Barack Obama administration
official said. []
The government money would be put alongside private capital
and then leveraged up to $500 billion, or possibly double that
amount, with the help of the Federal Deposit Insurance Corp, a
U.S. bank regulator, and the Federal Reserve.
"For now markets are buying into the risk recovery story ...
and that's a short-term negative for the dollar," said Rabobank
strategist Jeremy Stretch.
The greenback weakened across the board, with investors
continuing to favour currencies whose central banks have
interest rates above zero and look less likely to use
quantitative easing to get their currencies moving.
"The combination of security purchases and money supply
growth is expected to generate positive effects for the economy
and the equity markets," said UniCredit equity strategist Tammo
Greetfeld.
"We are sticking to our picture of a bottoming process and
expect higher index levels in the course of the year," he said.
UniCredit's end-2009 target for the blue-chip DJ EuroSTOXX50
index <> of 2,250 points suggests 8 percent upside
potential. This index was up 1.5 percent at 0930 GMT, with the
broader FTSeurofirst 300 index <> 1.4 percent higher.
Financials were leading gainers, with Dutch ING Group
<ING.AS> up 11 percent, Britain's Barclays <BARC.L> rising 9
percent and Germany's Deutsche Bank <DBKGn.DE> 6 percent higher.
ABU DHABI'S AABAR BUYS STAKE IN DAIMLER
Outside financials, German carmaker Daimler <DAIGn.DE>
advanced 4 percent on news that Abu Dhabi government-linked
Aabar Investment <AABAR.AD> had bought a 9.1 percent stake,
becoming Daimler's top shareholder.
"Aabar is recognising that the near-75-percent fall (in
Daimler's share price) from the 2007 78-euro peak may be
generating a unique buying opportunity," Merrill Lynch said in a
research note, reiterating its "buy" rating on the stock.
In Asia, the MSCI index <.MIAPJ0000PUS> of Asia Pacific
stocks outside Japan was up 4.3 percent, having hit the highest
level since mid-January, supported mostly by the energy,
financial and materials sectors.
Tokyo's Nikkei <> rose 3.4 to its highest close since
late January, getting the biggest boost from technology shares.
Shares in Japan's big banks outperformed. Mizuho Financial
Group <8411.T> rose 5.3 percent and Mitsubishi UFJ Financial
Group <8306.T>, the country's biggest bank, gained 4.7 percent.
MUFG said earlier it would cut 1,000 jobs.
"If the U.S. authorities actually succeed in buying up to $1
trillion of 'toxic assets', it would be considered a significant
step by the financial markets. However, the markets will be
disappointed if the programmes did not move forward due to
problems regarding how the assets' value is measured," said
Mamoru Yamazaki, chief economist with RBS Securities in Tokyo.
As equities rallied, euro zone government bond futures lost
ground, retreating from the near three-week highs set last week.
However, U.S. Treasury futures wiped out earlier losses in
Europe in a light-volume rally.
Hopes that the U.S. Treasury's bank plan will help revive
economic growth lifted crude oil <CLc1> over $52.5 a barrel.
U.S. Treasury Secretary Timothy Geithner is set to speak at
1245 GMT to elaborate on the plan to remove toxic assets from
bank balance sheets.
(Editing by Stephen Nisbet)
