By Gavin Serkin May 10 (Bloomberg) -- The euro strengthened the most in 18 months against the yen, stocks climbed around the world and Greek bonds soared after European policy makers unveiled a $960 billion loan plan to end the region’s sovereign-debt crisis. The euro appreciated 4.4 percent against the yen as of 9:34 a.m. in London, its biggest gain since November 2008. Spain’s benchmark stock index, the IBEX 35, rose the most on record. The premium investors demand to hold Greek 10-year bonds tumbled more than 600 basis points as the yield on German bunds, Europe’s benchmark government securities, rose 20 basis points. The 10-year Treasury yield climbed 18 basis points. Gold dropped the most since April 16 while oil surged more than 4 percent. Governments of the 16 euro nations agreed today to lend as much as 750 billion euros ($962 billion) to countries under attack from speculators. The European Central Bank said it will counter “severe tensions” in “certain” markets by purchasing government and private debt. Concerns that the Greek financial crisis will spread wiped $3.7 trillion from the value of global stock markets last week. “The authorities have put in place the mother of all aid plans, in an effort to prevent further losses in confidence,” Ciaran O’Hagan, a fixed-income strategist at Societe Generale SA in Paris, wrote in a note to investors. “We are seeing standard moves in favor of risk appetite after all the announcements. Whilst the market reaction has been positive, it is still very early days.” Improving Economy The emergency action may allow investors to return their focus to the improving outlook for the global economy. About 70 percent of companies on the MSCI World Index that reported quarterly earnings since April 12 have beaten analysts’ forecasts, according to Bloomberg data. Employment in the U.S. increased in April by the most in four years, the Labor Department said May 7, indicating the recovery is becoming self- sustaining. The euro climbed 2.2 percent to $1.3079, extending its two- day advance to 3.6 percent, the most in more than a year. The 16-nation currency is down 8.9 percent against the dollar this year. For now, the rescue package “may be viewed as a positive and we may recover some of the losses we had in equities last week,” Oscar Pulido, a portfolio specialist at BlackRock Inc., said in a briefing in Seoul today. “In the longer-term, it’s going to be very much dependent on whether governments in these countries can truly take the measures to reduce the deficits they’ve accumulated.” BlackRock managed $3.36 trillion in assets as of March 31, according to its Web site. U.K. Election Moves The pound rose amid speculation Conservative leader David Cameron may forge a coalition government with his Liberal Democrat counterpart Nick Clegg after last week’s election failed to give any one party a parliamentary majority. Sterling appreciated 1 percent versus the dollar and strengthened 3 percent compared with the yen. The cost of insuring Greece’s government bonds from default plunged, with credit-default swaps on the nation falling 258.5 basis points to 657, according to CMA DataVision prices. The yield on the Greek 10-year bond slid 474 basis points to 7.92 percent, narrowing the extra yield, or spread, to bunds to 342 basis points, from 965 basis points at end of last week. The Portuguese 10-year spread tumbled to 202 basis points from 349 basis points. The Spanish spread declined to 94 basis points from 164 basis points. Santander, Paribas Gain The MSCI World Index of 23 developed nations’ stocks rallied 2.5 percent, paring this year’s decline to 3.5 percent. Banco Santander SA, Spain’s largest lender, climbed 18 percent in Madrid, reversing last week’s 18 percent loss. BNP Paribas, the biggest French bank, advanced 16 percent in Paris while Barclays Plc gained 15 percent in London. BP Plc, battling an oil spill in the Gulf of Mexico, slipped 1 percent as it prepared to lower a second, smaller containment dome over the main leak point after suspending efforts to place an initial cover over the weekend. The MSCI Asia Pacific Index climbed 1.6 percent, snapping five days of losses. Esprit Holdings Ltd., which gets 85 percent of its revenue from Europe, rose 3.7 percent in Hong Kong. Commonwealth Bank of Australia, the nation’s biggest bank by market value, gained 5.2 percent in Sydney. Bridgestone Corp. increased 4.7 percent in Tokyo after the tiremaker boosted its profit forecast. U.S. Stock Futures The rally in U.S. futures indicated the S&P 500 will pare some of last week’s 6.4 percent plunge, the biggest drop in a year. Waves of electronic selling helped push the Dow Jones Industrial Average down as much as 9.2 percent on May 6, the biggest drop since the crash of 1987, before paring losses. The VIX, the benchmark index for U.S. stock options, surged 86 percent to 40.95 for the biggest weekly gain in its history. U.S. Treasuries declined as demand for the safest assets waned. The jump on the 10-year yield to 3.59 percent was the biggest since Aug. 3. The 3.625 percent security due February 2020 fell 1 11/32, or 13.44 percent $1,000 face amount, to 100 9/32. The advance in the yield on the 10-year German bund, to 2.98 percent, was the largest since October 1998. Gold for immediate delivery retreated as much as 2 percent to $1,184.18 an ounce in London, after rising to within 1.1 percent of a record on May 7. Developing-nation bonds climbed, sending the spread over U.S. Treasuries down 27 basis points, the most in 11 months, according to JPMorgan Chase & Co.’s EMBI+ Index. The MSCI Emerging Markets Index climbed 3.1 percent, rallying from a 9.1 percent drop last week that was the steepest for the equities gauge since February 2009. Hungary’s BUX Index rose 9.1 percent and the forint strengthened 1.9 percent against the euro, the most in a year. Oil and nickel led gains in commodities on speculation the European funding initiative will maintain economic growth in the region. Crude oil had its biggest jump in seven months as the June delivery contract rose as much as $3.40 to $78.51 a barrel in electronic trading on the New York Mercantile Exchange Palladium for immediate delivery added 3.4 percent to $531 an ounce, the most since April 14. Copper for delivery in three months rose 3.2 percent to $7,163.75 a metric ton on the London Metal Exchange. Nickel rallied as much as 4.9 percent. To contact the reporter for this story: Gavin Serkin at gserkin@bloomberg.net

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