Global stocks post records on Europe rescue plans

By Herbert Lash

NEW YORK (Reuters) - Global stocks surged to record single-day gains on Monday, bouncing off 5-year lows, while oil prices rose, after governments in Europe took bold steps to quell the global financial crisis and avert a deep recession.

The Dow soared more than 900 points, its largest point gain ever. All three major U.S. stock indexes jumped more than 11 percent, while a benchmark European index surged a record 10 percent.

The Dow Jones industrial average .DJI rallied 936.42 points or 11.08 percent, to close at 9,387.61. The Standard & Poor's 500 Index .SPX also scored its largest single-day point gain ever -- surging 104.13 points, or 11.58 percent, to 1,003.35. The Nasdaq Composite Index .IXIC advanced 194.74 points, or 11.81 percent, at 1,844.25.

Crude oil prices jumped more than 4.0 percent along with other commodities, and euro-zone government debt prices fell as the European banking system rescue, designed to shake a global credit crunch out of a deep freeze, removed a flight-to-safety bid.

The jump in U.S. equities erased the previous one-day record of more than 5.73 percent in the benchmark S&P 500 two days after the Black Monday crash of October 1987. It was the Dow's best percentage gain since March 15, 1933.

The U.S. Treasury market for government debt was closed for the Columbus Day holiday.

Britain, Germany, France, Italy and other European governments pledged hundreds of billions of dollars to recapitalize ailing banks and boost flagging confidence in the world's wobbly financial system.

The U.S. Federal Reserve, the European Central Bank, the Bank of England and the Swiss National Bank also said they would lend commercial banks as much U.S. dollar liquidity as they needed at fixed rates to restart interbank lending.

In the United States, Treasury Secretary Henry Paulson said Washington was developing plans to buy equity in financial institutions to halt the prolonged market turmoil.

Jack Ablin, chief investment officer at Harris Private Bank in Chicago, said that with luck, the European measures will make edgy investors think long-term instead of fret hour-by-hour.

"Sometime last week it seemed like we faced Armageddon, so to have a coordinated plan on stabilizing banks is huge progress," Ablin said. But "it's clearly an oversold bounce."

MSCI's all country world index .MIWD00000PUS surged 9.52 percent, its biggest one-day percentage gain in at least two decades. The index's market value increased by $1.7 trillion.

FINANCIAL STOCKS BIGGEST WINNERS

Battered financial stocks were among the biggest gainers on both sides of the Atlantic.

Morgan Stanley (MS.N) vaulted 87 percent after Japan's Mitsubishi UFJ Financial Group (8306.T) said it would go ahead with its plan to pay $9 billion for a 21 percent stake in the former investment bank, now a bank holding company.