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.
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.
In Europe, Swiss CS Group CSGN.VX rose 28 percent, Dutch ING Group ING.AS climbed 27 percent, Swiss Re RUKN.VX rose 21.6 percent and Standard Life SL.L advanced 20.5 percent.
Shares of General Motors (GM.N) climbed almost 33 percent following news that the company — the largest U.S. automaker — had held merger talks with rivals Chrysler LLC and Ford Motor Co (F.N). Ford’s shares rose 20 percent.
The FTSEurofirst 300 .FTEU3 index of top European shares closed 10.1 percent higher at 937.41.
In Britain, shares of banks taking part in the bailout — notably HBOS HBOS.L, Lloyds TSB (LLOY.L) and Royal Bank of Scotland (RBS.L) — fall sharply. HBOS fell 27.5 percent, Lloyds TSB sank 14.5 percent and RBS lost 8.4 percent.
Analysts said Europe’s bold steps, which many said eclipsed weekend pledges by ministers of the Group of Seven industrial nations to take action and ensure coordination, should successfully tackle the lending paralysis over time.
“It’s enough to get these money markets up and running again,” said David Keeble, head of rates strategy at Calyon in London. “But it might take a few weeks to get it filtering through to the coal face, as it were,” he said.
Asian stocks jumped more than 7.0 percent, according to MSCI’s index of Asia-Pacific stocks outside Japan .MIAPJ0000PUS, after tanking more than 20 percent last week to the lowest since December 2004.
Japanese markets were closed for a holiday.
Gold at first rose as the U.S. dollar slipped, but later fell, as the need for a safe-haven investment dissipated, while commodities recovered broadly after Friday’s rout, with industrial metals, sugar, grains and coffee all rising.
Spot gold prices fell $14.95 to $832.45 an ounce.
Oil prices rose even as Goldman Sachs, a long-standing commodity bull, conceded global markets would take a far bigger toll on energy demand than previously expected and said crude could slide to $50 a barrel if the financial crisis deepened.
U.S. crude gained $3.49 to settle at $81.19 a barrel. Worries about the impact of the financial crisis on energy demand and a flight of investors into safer havens had sent prices on Friday to the lowest level since September 2007.
London Brent crude rose $3.37 to settle at $77.46 a barrel.
The euro surged as much as 1.8 percent from a 1-1/2-year low against the dollar, and the interbank cost of borrowing in sterling, euros and dollars fell as confidence in money markets showed signs of returning.
The euro rose 1.29 percent to $1.3585.
The dollar dipped against a basket of major currencies, with the U.S. Dollar Index .DXY off 0.03 percent at 81.506. Against the yen, the dollar rose 1.19 percent to 101.84.
Reporting by Ellis Mnyandu, Steven C. Johnson and Matthew Robinson in New York; Jamie McGeever, Emelia Sithole-Matarise and Jan Harvey in London and Peter Starck in Frankfurt; Writing by Herbert Lash; Editing by Jan Paschal