* Global stock markets rally after huge EU-IMF rescue plan
* Euro rises broadly as central banks buy local govt debt
* Oil jumps to near $77 a barrel on emergency rescue deal
* Bonds plunge as $1 trillion rescue hammers safe-havens
(Updates with close of U.S. markets)
By Herbert Lash
NEW YORK, May 10 (Reuters) - Global equity markets staged a
massive relief rally on Monday after officials agreed to a $1
trillion emergency rescue package to halt a festering sovereign
debt crisis in Europe from engulfing the rest of the world.
The euro rose broadly after the European Union and the
International Monetary Fund carved out an emergency rescue
package of up to 750 billion euros ($1 trillion) to keep
Greece's debt crisis from spreading through the euro zone.
The price of oil and other commodities surged as the rescue
deal stoked investors' appetite for riskier assets, and
safe-havens like bonds tumbled as the aversion to risk eased.
The equities rally began in Asia after EU and IMF officials
announced the deal and then caught fire around the world as
other markets opened. European shares rose at their fastest
clip in more than 17 months, while the S&P 500 posted its
biggest percentage and point gain at the open since at least
the late 1960s.
U.S. stocks finished the day with the best one-day gain in
more than a year.
The European aid package was the biggest government rescue
since the Group of 20 leaders moved to stabilize markets after
the Lehman Brothers collapse in September 2008 led the U.S.
recession to spread worldwide and sent markets plunging.
[]
"This could've been another situation like when Bear
Stearns and Lehman Brothers failed, but the rescue plan shows
how serious Europe is about preventing that," said Alan Lancz,
president of Alan B. Lancz & Associates, an investment advisory
firm in Toledo, Ohio.
Banks ranked among the top beneficiaries as the huge
bailout reduced fears of a possible default. The STOXX Europe
600 banking index <.SX7P> jumped 14 percent after a drop last
week by the same magnitude.
On Wall Street, the S&P Financial index <.GSPF> climbed 5.6
percent and was the top gainer among S&P sectors.
A global measure of world equity performance gained almost
5 percent, while markets in Italy, Spain and Portugal climbed
more than 10 percent.
The Dow Jones industrial average <> closed up 404.71
points, or 3.90 percent, at 10,785.14. The Standard & Poor's
500 Index <.SPX> rose 48.85 points, or 4.40 percent, at
1,159.73. The Nasdaq Composite Index <> climbed 109.03
points, or 4.81 percent, at 2,374.67.
But questions about how the plan will work knocked the euro
off its high for the day near $1.31, after having rebounded
from a 14-month low near $1.25 hit last week when markets
feared the debt crisis in Greece would spread to other euro
zone countries.
By late afternoon the euro <EUR=> was below $1.28, not far
from its level late Friday, before the bailout was announced.
"We're still not sure how some of the funding will work,
and I don't think this addresses the core problem: Greece's
debt trajectory is still by any measure unsustainable," said
Win Thin, senior currency strategist at Brown Brothers Harriman
in New York.
The rescue package was on the scale of the $700 billion
Troubled Asset Relief Program launched by the United States to
fend off the worst financial crisis since the Great
Depression.
In addition, there were measures by central banks to
address funding strains and a European Central Bank plan to buy
the region's government bonds. []
A number of European central banks said they had already
started. []
MSCI's all-country world equity index <.MIWD00000PUS> rose
4.8 percent, while its emerging market index <.MSCIEF> gained
4.4 percent.
The pan-European FTSEurofirst 300 <> closed up 7.4
percent at 1,038.91, the biggest one-day percentage gain since
November 2008.
U.S. crude for June delivery <CLMO> settled up $1.69, or
2.25 percent, at $76.80 a barrel.
The euro <EUR=> was up 1.07 percent at $1.2792.
The dollar was down against a basket of major currencies,
with the U.S. Dollar Index <.DXY> off 0.30 percent at 84.198.
Against the yen, the dollar <JPY=> was up 1.75 percent at
93.16.
Gold slipped less than 1 percent, holding relatively firm,
as analysts said the bailout could lead to negative economic
implications and weigh down on the euro in the longer term.
[]
U.S. June gold futures <GCM0> on the COMEX division of the
NYMEX settled down $9.60 at $1,200.80 an ounce.
In bond markets, the premiums investors demand to buy
peripheral euro zone government bonds rather than German
benchmarks fell.
Greek bonds were the biggest gainers in the euro zone with
the short-end outperforming, causing the 2/10-year yield curve
to flatten sharply. []
Liquidity in Greek bonds dried up last week with no trades
going through.
"They've attacked this problem from all angles and it's
given a big boost to risk markets at the expense of government
bonds," said Nick Stamenkovic, strategist at RIA Capital
Markets in Edinburgh.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 33/32 in price to yield 3.54 percent.
In Asia, Hong Kong shares had their biggest one-day rise in
five months, the MSCI ex-Japan index <.MIAPJ0000PUS> rose 3.4
percent, and Japan's Nikkei <> ended up 1.6 percent.
(Reporting by Ryan Vlastelica, Wanfeng Zhou, Burton Frierson
in New York; Christopher Johnson, William James, Brian Gorman
in London; Writing by Herbert Lash; Editing bu Leslie Adler)
