* Bank bailout plans buoy investor sentiment
* European shares up 4 percent, Japan 14 percent
* Investors sell yen, government bonds
* ZEW worse than expected
By Jeremy Gaunt, European Investment Correspondent
LONDON, Oct 14 (Reuters) - Global investors jumped into
equities for the second day in a row on Tuesday, dumping
relatively safer assets as they took comfort from concerted
efforts by governments to shore up the financial system.
Much of the trading was unwinding panic moves from last week
when fears about the worst financial crisis in nearly 80 years
swept across the world.
European shares followed Asia higher, rising nearly 5
percent. Japan's Nikkei <>, which was not traded on Monday
because of a holiday, gained more than 14 percent.
MSCI's main world stock index <.MIWD00000PUS> was up more
than 3.4 percent, gaining more than 12 percent for the week to
date after plunging 20 percent last week.
Until this week's rally, the index had lost 47 percent of
its value from an all-time high roughly a year ago.
Its emerging market stock counterpart (.MSCIEF> was up 5.1
percent on the day, adding to Monday's 7.4 percent gain.
Investments seen recently as relatively safe compared with
stocks -- the Japanese yen and government bonds -- fell.
"The most important thing is to get money markets working
again," said Neil Parker, market strategist at Royal Bank of
Scotland.
"If we can do that, with a combination of the measures that
have already been put in place and further interest rate cuts
from the central banks, then we could be reaching a turning
point."
The United States will announce plans later in the day to
inject $250 billion into its banks, following similar moves by
Britain, France, Germany and others on Monday.
Japan also joined the global push, saying it could inject
public funds into regional banks to make sure small firms can
get cash. []
The pan-European FTSEurofirst 300 index was up 4.9 percent
points after its strongest one-day percentage rise on record --
10.1 percent -- on Monday.
"Market players are hoping that the crisis has reached a
turnaround point thanks to the extensive aid programmes," German
bank Helaba said in a note.
Earlier, Japan's benchmark Nikkei surged 14.2 percent or
1,171.14 points to 9,447.57. The broader Topix <> gained
13.7 percent to 956.30.
ECONOMY WORRIES
Some analysts warned, however, that once the relief about
the financial system had played through, the declining state of
the world economy remained.
"We will inevitably enter a phase of thinking about how the
steps will actually impact the global economy," said Daiwa SB
Investments' Ogawa.
This was underlined on Tuesday by the monthly ZEW German
investor sentiment survey.
It showed the outlook for Europe's largest economy
deteriorated by more than expected this month, with the index
falling to -63.0 from -41.1 in September.
The yen fell against both the euro and dollar.
"We've seen a very strong relief rally after severe falls on
global stock markets, but to say that everything is over and
it's going to be hunky-dory from now on is premature," Nordea FX
strategist Niels Christensen said.
"Governments and central banks have done what they can do,
but that said, still, we don't have the money market functioning
as it used to," he added.
The euro rose 0.7 percent against the yen to 139.73
<EURJPY=>, having rebounded off a three-year low of 132.15 yen
hit on trading platform EBS on Friday.
The dollar was up 0.3 percent at 102.26 yen <JPY=>. The euro
also gained half a percent against the dollar <EUR=> to $1.3660.
On government bond markets, short-term euro zone debt prices
fell as investors sold.
Two-year Schatz yields <EU2YT=RR> climbed 10 basis points to
3.274 percent, while 10-year Bund yields <EU10YT=RR> were flat
at 4.082 percent.
