(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, Feb 25 (Reuters) - Global stocks jumped to big
gains on Monday on easing credit worries as a proposed plan to
rescue a leading U.S. bond insurer began to emerge and a credit
agency's raised its view of another huge insurer.
Oil rose above $99 in volatile trading, and New York gold
futures finished lower after setting a record high of $958.40
an ounce last week.
The dollar and euro both rose against the yen because the
rescue plan for Ambac Financial Group Inc <ABK.N> began to
take shape and Standard & Poor's gave a more upbeat new
assessment of MBIA Inc <MBI.N>, whose improved creditworthiness
affects billions of dollars of debt.
The Dow Jones industrial average <> was up 181.95
points, or 1.47 percent, at 12,562.97 in early, unofficial
closing prices. The Standard & Poor's 500 Index <.SPX> was up
17.89 points, or 1.32 percent, at 1,371.00. The Nasdaq
Composite Index <> was up 23.88 points, or 1.04 percent,
at 2,327.23.
"We're robustly higher across a broad spectrum. Keeping the
AAA rating (on MBIA) was massively important for the market,
coupled with the Ambac news," said Peter Kenny, managing
director at Knight Equity Markets in Jersey City, New Jersey.
U.S. Treasury prices fell and European credit spreads
tightened on signs of eased credit concerns. A bailout would
help limit the damage from the credit crisis, which has shaken
U.S. and European banks and threatened to slow economic
growth.
"Bonds are getting hit," said Andrew Brenner, a market
analyst at MF Global. "The Ambac deal will be key to how the
market trades this week."
Investors have been spooked by the threat of credit
downgrades raised by bond insurers' exposure to U.S. subprime
mortgages. The U.S. financial service sector has been
particularly hard hit by credit crisis.
Even with the bond insurer's crisis potentially solved, the
global financial system would still need to work through losses
in the hundreds of billions of billions of dollars for bad
loans.
Goldman Sachs said it expects additional write-downs of
about $1 billion to $12 billion each for several major U.S.
brokers in the first quarter, with Citigroup <C.N> estimated to
record the highest amount of about $12 billion.
The brokerage lowered its first-quarter and 2008 earnings
estimates for Bear Stearns <BSC.N>, Lehman Brothers <LEH.N>,
Morgan Stanley <MS.N>, JPMorgan Chase <JPM.N> and Merrill Lynch
<MER.N> to reflect continued challenges in the credit markets.
The rescue plan for Ambac had been expected to be announced
on Monday or Tuesday, sources said last week. Reports of a
bailout led U.S. stocks to reverse course and post a late-day
rally last Friday.
European shares rose, buoyed by financials amid
consolidation talk, hopes that a Ambac rescue for U.S. bond was
close and as Qatar's $60 billion sovereign wealth fund weighed
investing in Europe's banking sector.
The pan-European FTSEurofirst 300 index <>
unofficially closed 1.7 percent higher at 1,342.65 points, the
highest close since Feb. 4.
Lending support to European banking shares, Qatari Prime
Minister Sheikh Hamad bin Jassim al-Thani said that Quatar,
which has bought "under" 2 percent of Credit Suisse <CSGN.VX>,
is looking to spend between $10 billion and $15 billion over
the next two years on bank stakes to diversify the country's
energy-based economy.
The Nikkei average <> rose more than 3 percent to a
six-week closing high on a newspaper report that said China's
sovereign wealth fund would buy as much as $10 billion in
Japanese stocks and optimism about the Ambac rescue plan.
But Hong Kong blue chips and China plays fell as tumbling
mainland stock markets unnerved investors, prompting a sell-off
of Chinese large caps in the financial and commodity sectors.
MSCI main world equity index <.MIWD00000PUS> was up 0.7
percent.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 26/32, with the yield at 3.9042 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 7/32, with the yield at
2.1329 percent. The 30-year U.S. Treasury bond <US30YT=RR> was
down 40/32, with the yield at 4.6629 percent.
Against the Japanese yen, the dollar <JPY=> was up 0.76
percent at 108.04 from a previous session close of 107.23.
U.S. crude oil futures bounced higher in volatile as
traders eyed geopolitical turmoil and OPEC's upcoming policy
meeting and weighed rising inventories and the risk of economic
slowdown.
New York gold futures finished lower after an U.S. official
said that Congress could support gold sales by the
International Monetary Fund (IMF), stirring fears that such
sales will take a toll on sentiment and weigh heavily on
bullion. The gold contract for April delivery at the COMEX
division of the New York Mercantile Exchange <GCJ8> settled
down $7.30 to $940.50 an ounce, trading between $935.50 and
$954.90.
(Reporting by Herbert Lash. Editing by Richard Satran)
