GLOBAL MARKETS-UK bank rescue plan cheers world stocks

                                
* MSCI world equity index up 0.4 percent at 215.33
                                
 * UK bank rescue package boosts Europe shares
                                
 * Government bonds, dollar fall
                                
 
                                
 By Natsuko Waki
                                
 LONDON, Jan 19 (Reuters) - World stocks rose on Monday while
government bonds fell after Britain launched a multi-billion
rescue plan for its troubled banks and the incoming U.S.
administration planned more measures to help the economy.
                                
 The UK government will allow banks to insure against steep
losses and guarantee their debt to stop the credit crunch
pushing the economy into a deep slump. The plan raises the
government's stake in Royal Bank of Scotland <RBS.L>, which said
it lost over 20 billion pounds last year, and also lays the
framework for the Bank of England to boost money supply.
                                
 Barclays <BARC.L>, whose shares fell 25 percent on Friday,
confirmed it expected to report full-year profit above the
consensus estimate.
                                
 The senior advisor of U.S. President-elect Barack Obama, who
is set to take office on Tuesday following a national holiday on
Monday, said there would be changes to make the second half of
the country's $700 billion bank rescue scheme more effective.
                                
 The measures on both sides of the Atlantic come as the
credit crunch, well into its second year, squeezes corporate
profits, hits consumer spending and pushes many major economies
into recession.
                                
 "Clearly everybody has been forced to accept that the global
economy is in dire straits, but it is the variety of solutions
that are being offered up that are dictating the markets at
present," Chris Hossain, senior manager at ODL Securities.
                                
 "Soothing words from Barclays, and further government
intervention within the banking system appear to have been taken
relatively well."
The MSCI world equity index <.MIWD00000PUS> rose 0.4
percent, above a one-month low set last week. The FTSEurofirst
300 index of leading European shares <.FTEU3> rose 0.9 percent.
                                
 Emerging stocks <.MSCIEF> rose 0.2 percent.
                                
 U.S. crude oil <CLc1> fell 1.1 percent to $36.10 a barrel,
pressured by concerns about weakening oil demand.
                                
 Safer government bonds fell across the board as stocks and
other risky assets outperformed. The March bund future <FGBLc1>
fell 54 ticks.
                                
 The dollar fell 0.4 percent to 90.61 yen <JPY=> while it was
down 0.3 percent <.DXY> against a basket of major currencies.
                                
 Sterling was down 0.8 percent at $1.4720 <GBP=> <EURGBP=>.
                                
 "There are still heavy losses being announced by the banking
sector and the market fears the government taking major stakes
in banks," Ian Stannard, senior FX strategist at BNP Paribas.
                                
 "Sterling is going to come under pressure on the back of
this, though in the medium-term the government announcement
should be positive for sterling as it helps stabilise credit and
lending markets."