* Global stocks soar on U.S. plan to corral credit crisis
* U.S. dollar surges against yen as risk appetite returns
* Oil jumps on hope U.S. plan to restore market confidence
* Government debt ebbs as investors unwind safe haven bets
(Recasts with opening of U.S. markets, adds byline; changes
dateline; previous LONDON)
By Herbert Lash
NEW YORK, Sept 19 (Reuters) - The U.S. dollar and global
stocks rallied on Friday as news of a sweeping U.S. government
plan to halt widespread turmoil in capital markets bolstered
investor confidence and sent safe-haven bets sharply lower.
The rally, spurred by a surge in financial stocks, added to
gains on Thursday, the best day on Wall Street in six years.
Leading European shares surged more than 7 percent,
Britain's top share index soared more than 8 percent and MSCI's
leading emerging market index jumped almost 10 percent.
Battered banking shares led the charge. Goldman Sachs
<GS.N> gained 18 percent, Citigroup <C.N> jumped 20 percent,
Merrill Lynch <MER.N> rose 23 percent, Bank of America <BAC.N>
gained 18 percent and Wachovia <WB.N> soared 27 percent,
although they had all gained considerably more at the open.
"What authorities are trying to do is just buy enough time
for the market to settle down and for the details of the
Paulson plan to be understood, how long it would take to
implement and what it means for the banks," said Paul
Mendelsohn, chief investment strategist at Windham Financial
Services in Charlotte, Vermont, referring to U.S. Treasury
Secretary Henry Paulson.
Paulson on Friday called for the U.S. government to spend
hundreds of billions of dollars to take toxic mortgage assets
off the books of financial firms to restore financial
stability.
In early morning trade, the Dow Jones industrial average
<> was up 324.38 points, or 2.94 percent, at 11,344.07. The
Standard & Poor's 500 Index <.SPX> was up 38.30 points, or 3.17
percent, at 1,244.81. The Nasdaq Composite Index <> was up
58.44 points, or 2.66 percent, at 2,257.54.
The yen tumbled to a 10-day low against the dollar, which
rose more than 3 percent versus the Japanese currency, and the
euro gained against the yen as the appetite for risk returned.
The dollar slipped against major currencies, with the U.S.
Dollar Index <.DXY> down 0.05 percent at 78.17. Against the
yen, the dollar <JPY=> was up 3.22 percent at 107.68.
The euro <EUR=> rose 0.52 percent at $1.4377.
The price of benchmark U.S. and euro zone government debt
dived as investors unwound safe-haven bets. The price of
30-year U.S. Treasury debt fell more than 3 points and
benchmark 10-year Treasury notes fell 2 full points.
The 10-year U.S. Treasury note <US10YT=RR> fell 53/32 to
yield 3.76 percent and the 30-year U.S. Treasury bond
<US30YT=RR> fell 89/32 to yield 4.37 percent.
Oil rose more than $4 to above $102 a barrel on
expectations the U.S. government's plan would ease battered
financial markets. U.S. light sweet crude oil <CLc1> rose $4.54
to $102.42 a barrel.
U.S. authorities tinkered with last-minute details to plans
to offload hundreds of billions of dollars of bad debt from
banks' balance sheets to ease investor fears that had clamped a
stranglehold on the global financial system in recent weeks.
U.S. securities regulators joined regulators from other
countries early Friday in temporarily banning short sales of
financial shares. In addition, the U.S. Treasury said it will
establish a program to guarantee money market fund holdings.
Spot gold prices <XAU=> rose $3.40 to $866.10 an ounce.
(Reporting by Ellis Mnyandu, Steven C. Johnson, John Parry,
Lucia Mutikani and Gertrude Chavez-Dreyfuss in New York and
Matthew Robinson and Atul Prakash in London; Writing by Herbert
Lash; Editing by James Dalgleish)
