* Global stock markets leap after bailout of GSEs
* Bank stocks set to be among standouts
* Altria buys UST, adding to positive tone
(Adds quote, byline, updates prices)
By Ellis Mnyandu
NEW YORK, Sept 8 (Reuters) - U.S. stock index futures
rallied on Monday, putting Wall Street on track for a surge of
2 percent or more at the open, as the government bailout of
U.S. home finance companies Fannie Mae <FNM.N> and Freddie Mac
<FRE.N> stoked a global equity surge.
Financial stocks were poised to lead gains at the start of
trade, with shares of Bank of America <BAC.N>, the No. 2 U.S.
bank, up 8 percent before the bell and those of Citigroup
<C.N>, the largest U.S. bank, up more than 9 percent.
Investors breathed a sigh of relief around the globe after
the U.S. government on Sunday seized control of the troubled
mortgage finance companies, launching what could be
Washington's biggest bailout ever to support the U.S. housing
market and ward off more global financial market turbulence.
The news propelled stock markets sharply higher in Asia and
Europe, where the benchmark FTSEurofirst 300 index <FTEU3> was
up 4 percent.
As Fannie Mae and Freddie Mac are key pillars of the U.S.
housing market, investors took their rescue as boosting chances
of forestalling further downside risk to the U.S. economy.
The bailout was also likely to shore up confidence in the
beleaguered financial services sector by helping stem the wave
of write-downs buffeting banks as they pile up losses stemming
from soured mortgage investments, according to analysts.
"The takeover of Fannie Mae and Freddie Mac signals that
the U.S. government is not going to sit and do nothing and let
the backbone of our economy be at risk," said Andre Bakhos,
president of Princeton Financial Group in Princeton, New
Jersey. "Investors can breathe easier. This removes a major
boulder off the market's shoulders."
S&P 500 futures <SPc1> jumped 33.60 points and were above
fair value, a formula that evaluates pricing by taking into
account interest rates, dividends and time to expiration on the
contract. Dow Jones industrial average futures <DJc1> leaped
248 points and Nasdaq 100 <NDc1> surged 35.50 points.
Fannie Mae and Freddie Mac's takeover plan makes it more
explicit that debt issued by the companies will be backed by
the U.S. government.
Bank of America shares rose to $35.13 before the bell,
while Citigroup shares climbed to $20.90. Another standout were
shares of American International Group <AIG.N>, the world's
largest insurer, up around 10 percent to $24.55.
Shares of Fannie Mae and Freddie Mac were unchanged.
Altria <MO.N> announced it was buying smokeless tobacco
maker UST <UST.N> in a deal valued at $11.7 billion, including
the assumption of $1.3 billion of debt. [].
(Editing by James Dalgleish)
