* Global stocks slip as U.S. bank plan disappoints
* Treasuries rise, German bund futures jump
* European shares close lower
* Dollar, yen gain after Treasury's rescue package
By Vivianne Rodrigues
NEW YORK, Feb 10 (Reuters) - Stocks fell and government
bonds jumped on Tuesday as investors worried the revamped plan
unveiled by the U.S. Treasury to shore up the banking system
might not be enough to stem the worsening financial crisis.
Disappointment with the long-awaited plan sent investors
into the shelter of the dollar and the yen, while oil prices
slipped and gold climbed above $900 per ounce.
U.S. Treasury Secretary Timothy Geithner rolled out the
renamed "Financial Stability Plan" to cleanse $500 billion in
spoiled assets from banks' books and support $1 trillion in new
lending through an expanded Federal Reserve program. For
details, see [].
The plan will also devote $50 billion in federal rescue
funds to try to stem home foreclosures and soften the crushing
impact of the housing crisis afflicting the world's largest
economy.
"The market has been looking forward for a long time on
clear and definite steps from policy-makers on how to clean up
these toxic assets. The statement does not give much away and
has now disappointed as markets were waiting for the detail,"
said Mike Lenhoff, strategist at Brewin Dolphin, in London.
"It was looking for positive guidance and, if it does not
find it, it is going to turn the thumbs down instead of up."
Financial stocks led declines in equity indexes worldwide,
with the S&P financial index <.GSPF> off more than 7 percent in
midday trading in New York and the Dow Jones industrial average
<> down 3.5 percent.
European shares closed lower. The pan-European FTSEurofirst
300 <> index of top shares ended down 2.9 percent at
805.94 points also stirred by mixed reaction to a roughly $7
billion fourth-quarter net loss from Swiss bank UBS <UBSN.VX>.
Earlier, Japan's Nikkei stock average <> slipped 0.3
percent to close at 7,945.94 and the broader Topix <> fell
0.1 percent to end at 778.10.
As investors turned away from riskier assets such as
stocks, demand for U.S. Treasuries rose.
"Given all this time they (U.S. policy-makers) still don't
have anything very specific nailed down," said Carl Lantz, U.S.
interest rate strategist at Credit Suisse in New York, adding
"that's going to be a disappointment for risky assets and it's
good for the bond market."
Benchmark 10-year Treasury notes <US10YT=RR> were trading
1-1/32 higher in price for a yield of 2.87 percent, from 2.99
percent late on Monday.
Euro-zone government bond futures extended gains drawing a
safety bid in reaction to the U.S. Treasury Department's plan.
March Bund futures <FGBLH9> were up 68 ticks on the day at
122.38, having traded around 122.12 before details of the plan.
Two-year yields were flat at 1.45 percent <EU2YT=RR> while
the 10-year Bund yield was four basis points down on the day at
3.365 percent <EU10YT=RR>.
RISK AVERSION
The dollar and the yen climbed as investors sought shelter
in both currencies on concerns about Washington's rescue plan.
The low-yielding dollar and yen are typically viewed as
safe-haven currencies with low volatility. When stocks drop and
the risk barometer shoots up, investors repatriate funds and
close out losing risky trades funded by these two currencies.
"Investors are skeptical about the effectiveness of this
investment fund," said Kathy Lien, director of FX research at
GFT Forex in New York. "We're still seeing risk aversion ...
and that's sending investors back into the safety of the U.S.
dollar and the Japanese yen."
The dollar fell 0.8 percent versus the yen to 90.78 <JPY=>
while the euro was 0.5 percent lower against the dollar at
$1.2935 <EUR=>.
Earlier, the euro slipped after Japan's Nikkei business
daily quoted the Russian Association of Regional Banks as
saying the industry group had submitted a proposal to the
government to postpone loan repayments of up to $400 billion in
corporate debt owed to foreign banks. []
Russia denied the media report but investors were wary of
taking large positions ahead of the bank plan.
Concerns about the Treasury Department plan and worries
about weak fuel demand sent oil prices lower. U.S. crude <CLc1>
was down 1 percent at $39.12 per barrel, off highs of $41.80
early in the session.
Gold prices topped $900 per ounce, climbing more than 2
percent to $919.00 following the Treasury plan.
(Additional reporting by Glenn Sommerville in Washington,
Gertrude Chavez-Dreyfuss in New York and Joanne Frearson in
London; Editing by Tom Hals)
