* World stocks rally on toxic asset plan, US home sales
* U.S. dollar weakens as appetite for risk returns
* Treasuries flat stocks rally offsets buyback plan
By Walter Brandimarte and Al Yoon
NEW YORK, March 23 (Reuters) - World stocks rallied and the
U.S. dollar weakened on Monday after Washington's plan to ease
the global financial crisis with purchases of up to $1 trillion
of troubled bank assets boosted investors' appetite for risk.
Commodity prices and emerging markets also posted strong
gains as investors moved cash into higher-yielding assets,
hoping the plan unveiled by U.S. Treasury Secretary Timothy
Geithner will normalize the financial system and allow the
global economy to recover.
The Treasury's plan includes a raft of incentives for
private investors to help rid banks of toxic assets that have
plunged the world economy into recession. For story, see
[].
"The market is glad, they like what they hear," said Kevin
Kruszenski, head of listed trading at KeyBanc Capital Markets
in Cleveland. "This is a big first test (for Geithner) to have
to take. The market being up is a vote of confidence for him."
The Dow Jones Industrials Average <> jumped 497.48
points, or 6.84 percent, to 7,775.86, its largest single-day
gain since late October. The Standard & Poor's 500 Index <.SPX>
shot up 54.38 points, or 7.08 percent, to 822.92, while the
Nasdaq Composite Index <> closed up 98.50 points, or 6.76
percent, at 1,555.77.
Appetite for risk was also underpinned by a report that
showed sales of existing homes in the battered U.S. housing
market rebounded in February. []
The MSCI World index <.MIWD00000PUS>, a gauge of global
stocks performance, soared 10.54 percent, rising for nine out
of the last ten days. The MSCI stock index for emerging markets
<.MSCIEF> rose 5.09 percent.
But a decline in prices of safe-haven U.S. Treasuries was
contained by expectations of an upcoming Federal Reserve's plan
to buy back government debt.
The benchmark 10-year U.S. Treasury note <US10YT=RR> fell
5/32 in price, with the yield at 2.652 percent. The 30-year
U.S. Treasury bond <US30YT=RR> was down 23/32, with the yield
at 3.6933 percent.
In the foreign exchange market, the U.S. dollar and the yen
weakened as investors reduced positions in safe-haven assets,
favoring high-yielding currencies such as the Australian and
New Zealand dollars.
The U.S. dollar weakened against a basket of major
trading-partner currencies, with the U.S. Dollar Index <.DXY>
down 0.41 percent at 83.367 from a previous session close of
83.708.
The euro <EUR=> gained 0.43 percent against the U.S. dollar
at $1.3638.
Against the yen, the single euro zone currency jumped on
electronic trading platform EBS to 132.56 yen <EURJPY=EBS>, its
highest since October 2008. It last traded at 132.31 yen.
"This is more about risk appetite with U.S. stocks up after
the Geithner announcement," said Brian Kim, currency strategist
at UBS in Stamford, Connecticut.
Bets that the global economy might be bottoming caused the
price of U.S. crude oil <CLc1> to rise $1.76, or 3.38 percent,
to $53.83 per barrel. The Reuters/Jefferies CRB Index <.CRB> of
19 commodity futures was up 3.46 points, or 1.53 percent, at
229.54.
Spot gold prices <XAU=> fell $12.85, or 1.35 percent, to
$938.00, on investors' reduced appetite for safety.
Details of the U.S. toxic debt plan, which surfaced over
the weekend, extended a nearly two-week global stock market
rally fueled by hopes that the financial system is stabilizing
after some of the largest U.S. banks, including Citigroup Inc.
<C.N>, said results were solid for January and February.
But the balance of risks is skewed to the downside in terms
of economic data and the first-quarter reporting season that
kicks off in a few weeks, according to JPMorgan.
(Additional reporting by Edward Krudy and Gertrude
Chavez-Dreyfuss in New York; Editing by Diane Craft)
