* MSCI World index up 1.5 pct; S&P 500 futures rise 3.2 pct
* Citigroup shares soar in Frankfurt on U.S. toxic debt plan
* Dollar weaker ahead Geithner speech on buying toxic assets
* U.S. 10-year Treasury yield up 3 bps; oil near $52.5 bbl
By Peter Starck
FRANKFURT, March 23 (Reuters) - Stock markets gained on
Monday while the dollar and U.S. government bonds fell as news
of Washington's plans to buy up to $1 trillion of toxic assets
from banks increased investors' appetite for risk.
The MSCI World index <.MIWD00000PUS>, a gauge of global
stocks performance, rose 1.5 percent by 1155 GMT.
Futures <SPc1> for the U.S. benchmark S&P 500 index <.SPX>
were up 3.2 percent and the Frankfurt-listed shares <TRV.F> of
U.S. bank Citigroup <C.N> shot up more than 30 percent.
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.
A U.S. official earlier said the government would put in $75
billion to $100 billion from its bailout plan to partner with
private investors and buy troubled assets.
Details of the U.S. toxic debt plan, which surfaced over the
weekend, extended a nearly two-week global stock market rally
fuelled by hopes that the financial system was stabilising after
some of the largest U.S. banks, including Citigroup, said they
had solid results in the first two months of the year.
"Equities may have short-term momentum, but there is little
fundamental support," JPMorgan said in a research note.
"The balance of risks remains skewed to the downside both in
terms of the economic data and the first-quarter reporting
season that kicks off in a few weeks time," JPMorgan said.
Goldman Sachs said: "Even with aggressive policy, there is
plenty of risk that we fade here as we have in other rallies,
particularly if worries about financial equities return."
RISK RECOVERY
The U.S. dollar weakened across the board, with investors
continuing to favour currencies of countries whose central banks
have interest rates above zero and look less likely to use
quantitative easing.
The dollar index <.DXY> was down 0.3 percent while the euro
<EUR=> edged up to $1.3625.
"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 softer greenback also gave a lift to crude oil prices
<CLc1>, which traded up 0.6 percent at $52.4 a barrel.
"As long as the U.S. dollar shows persistent weakness, oil
prices should still have more upward potential," said
Commerzbank commodities analyst Eugen Weinberg.
As equities rallied, euro zone government bond and U.S.
T-Bond futures lost ground. The June Bund future contract fell
0.4 percent and the T-Bond future was down 0.2 percent.
The yield on benchmark U.S. 10-year Treasuries rose 3 basis
points to 2.667 percent by 1155 GMT.
Oliver Schlumpf, asset allocation strategist at
Liechtenstein's VP Bank, said he expected the U.S. Federal
Reserve's quantitative easing to trigger a turnaround.
"The Fed has practically given risk-averse investors a price
guarantee. In coming months, Treasury prices will move in only
two directions, sideways or up," Schlumpf said.
Europe's top-300 stock market index <> rose 2 percent,
up for the third session in a row, led by financials.
Dutch ING Group <ING.AS> rose 18 percent, Britain's Barclays
<BARC.L> gained 9.5 percent, Italy's UniCredit <CRDI.MI> almost
9 percent and Deutsche Bank <DBKGn.DE> -- over 6 percent.
German carmaker Daimler <DAIGn.DE> rose 2 percent on news
that Abu Dhabi government-linked Aabar Investment <AABAR.AD> had
bought a 9.1 percent stake, becoming Daimler's top shareholder.
"Abu Dhabi must be taking a longer term view, reckoning that
this is a good entry point," said Peter Caldwell, analyst at
Barclays Wealth. "It is also a mark of confidence in Daimler's
long-term value," he added.
In Asia, the MSCI index <.MIAPJ0000PUS> of Asia Pacific
stocks outside Japan rose 4.6 percent, 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.
Japan's big banks also outperformed, Mizuho Financial Group
<8411.T> and Mitsubishi UFJ Financial Group <8306.T> gaining
about 5 percent each.
(Editing by Patrick Graham)
