RTRS: World stocks surge on economic stimulus hopes
By Jeremy Gaunt and Leah Schnurr
LONDON/NEW YORK (Reuters) - Stock markets around the world rebounded on Monday, helped by governments reinforcing their plans for countering the global economic crisis.
Bond yields rose as a result and the U.S. dollar slipped as the need for a safe haven diminished.
"The central banks have done their job and now the focus is on governments -- in addition to Obama's plan we have stimulus packages from India, Australia and China," said Thierry Lacraz, strategist at the Swiss private bank Pictet in Geneva. "While this will not avoid a recession, investors at least have the feeling that the people in charge are doing the right thing."
U.S. stocks rallied on optimism that President-elect Barack Obama's plan to invest in a massive infrastructure plan will bolster the economy and on hopes for a rescue plan for U.S. automakers.
Over the weekend, Obama outlined plans for the largest infrastructure investment since the 1950s in a bid to create at least 2.5 million jobs by 2011.
"It's something tangible that really hasn't been talked about previously," said Bucky Hellwig, senior vice president at Morgan Asset Management in Birmingham, Alabama. "It has a direct impact on a lot of sectors in the market that have gotten oversold."
Companies tied to large construction projects helped fuel the second day of gains in a row, including Dow component Caterpillar (CAT.N: Quote, Profile, Research, Stock Buzz), which was up 12.5 percent at $43.03.
Shares in industrial, energy and materials companies also benefited, and an advance in commodities, including oil, lifted stocks related to resources.
The Dow Jones industrial average .DJI climbed 281.95 points, or 3.27 percent, to 8,917.37. The Standard & Poor's 500 Index .SPX rose 32.52 points, or 3.71 percent, to 908.59. The Nasdaq Composite Index .IXIC ended up 62.43 points, or 4.14 percent, at 1,571.74.
Investors were also hopeful that a financial lifeline for ailing U.S. automakers could be imminent, buoying sentiment. Shares of General Motors (GM.N: Quote, Profile, Research, Stock Buzz) jumped 16.7 percent to $4.76 and Ford (F.N: Quote, Profile, Research, Stock Buzz) surged 23.2 percent to $3.35.
The market's advance saw the broad S&P 500 extend its recovery since it hit an 11-year low on Nov 21. The index is up more than 20 percent since November 21.
European Union leaders met to discuss proposals to give the eurozone economy a 200 billion euro boost, while India announced a $4 bln spending package.
The FTSEurofirst 300 .FTEU3 index of top European shares closed 6.9 percent higher at 848.48 points.
The Morgan Stanley Capital World Stock Index .MIWD00000PUS rose 5.74 percent to 220.97.
