(Removes reference to Japanese stock market, which shut for
national plan)
* U.S. banking plan disappoints, investors shun risk
* European shares down 0.8 percent
* Yen gains, dollar generally weaker
By Jeremy Gaunt, European Investment Correspondent
LONDON, Feb 11 (Reuters) - Investors voted with their feet
against the newest U.S. bank bailout plan on Wednesday, knocking
stocks lower, widening credit spreads and boosting safer-haven
currencies.
There was general concern that the $2 trillion plan,
unveiled by U.S. Treasury Secretary Timothy Geithner on Tuesday,
was not sufficiently clear in how it would cement the security
of the shaken U.S. financial system.
"They've come out with this massive package that nobody
understands and it makes people extremely nervous," said David
Buik of Cantor Index in London.
"(Investors) want significantly more meat on the bone, they
want to know how it's going to work."
The U.S. Senate also voted to pass an $838 billion economic
rescue plan on Tuesday, but investor reaction clearly showed
greater concern about financial security.
World stocks as measured by MSCI <.MIWD00000PUS> fell 0.6
percent after losing 3 percent on Tuesday. Emerging market
shares <.MSCIEF> were down 1.5 percent.
Overnight, following Geithner's unveiling of the plan, U.S.
stocks fell more than 4.5 percent [].
In Europe, the FTSEurofirst 300 <> was down 0.8
percent []. Japan's market was closed for a holiday.
Disappointment over the bank plan could also be seen on
credit markets, where spreads widened, indicating subdued risk
appetite.
Spreads on Merrill Lynch's 6.875 percent notes due in 2018,
for example, widened to 500 basis points over Treasuries on
Tuesday, out from 474 basis points before the plan was unveiled,
according to MarketAxess.
The mood carried over into Europe and Asia credit markets on
Wednesday.
"It is quite clear from Geithner's words that a lot of work
remains to be done before the plan is fully operational," Calyon
credit strategists in Asia commented in a note to investors.
"In addition, Geithner insisted once again on the fact there
is no easy way (out) from this banking crisis."
CAUTION
The yen gained, as it has recently when investors become
cautious.
The dollar fell 0.3 percent to 90 yen <JPY=>, having shed
1.3 percent on Tuesday. The dollar also fell against the euro
<EUR=>, with the single European currency gaining 0.5 percent to
$1.2966.
Euro zone government bond futures jumped one-third of a
point at the opening on a move to relative safety.
The interest rate-sensitive two-year Schatz yield <EU2YT=RR>
was down 4 basis points at 1.433 percent. The 10-year Bund yield
<EU10YT=RR> was down 6 basis points at 3.290 percent.
(Additional reporting by Rebekah Curtis and Jane Baird; editing
by Patrick Graham)
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge
Fund Blog click on http://blogs.reuters.com/hedgehub)
