By Darren Boey and Saeromi Shin May 10 (Bloomberg) -- Asian stocks, U.S. index futures and the euro surged as European policy makers unveiled a loan package worth almost $1 trillion and plans to buy bonds to end a sovereign-debt crisis. Treasuries plunged the most in six weeks. The MSCI Asia Pacific Index rose 1.2 percent to 119.86 as of 2 p.m. in Tokyo, its first advance in six days. Standard & Poor’s 500 Index futures climbed 2.8 percent. The euro rose 1.4 percent to $1.2933. South Korea’s won jumped 2.3 percent against the dollar, while the cost of protecting Asia-Pacific bonds from default fell the most in a year. Governments of the 16 euro nations today agreed 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 debt crisis will spread wiped $3.7 trillion from the value of global stock markets last week. “In the short-term, it 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 dependant 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. Gauges of raw-material producers, energy and finance companies in the MSCI Asia Pacific Index all rose at least 1.9 percent, the most among 10 industry groups. The three industry measures posted the MSCI index’s biggest declines last week. Biggest Banks HSBC Holdings Plc, Europe’s largest bank, climbed 2.2 percent to HK$75.20 in Hong Kong, following last week’s 9.1 percent tumble. Commonwealth Bank of Australia, the nation’s biggest bank by market value, climbed 3.7 percent to A$54.98. Rio Tinto Group, the world’s third-largest mining company, rose 4.1 percent to A$67.66 as copper increased 1.1 percent in London to $7,020 a metric ton. Korea Zinc Co. gained 5.2 percent to 194,000 won in Seoul. Under the loan package, euro-area governments pledged 440 billion euros in loans or guarantees, with 60 billion euros more in loans from the European Union’s budget and as much as 250 billion euros from the International Monetary Fund. The ECB said it will conduct “interventions” to ensure “depth and liquidity” in markets. “A coordinated effort by ECB and the EU member nations is exactly what was needed to bring back stability and order,” said Prasad Patkar, who helps manage $1.7 billion at Platypus Asset Management Ltd. in Sydney. “This may well end the crisis in Europe as the fears of policy inertia from disunity and domestic political priorities of the member nations recede.” Yen, Treasuries Decline The steps came after failure to contain Greece’s fiscal crisis triggered a 4.1 percent tumble last week in the euro versus the dollar, the most since the five days ended Oct. 24, 2008. Europe concerns, exacerbated by waves of computerized trades, caused the Dow Jones Industrial Average to briefly plunge by 1,000 points on May 6. The euro today soared 2.5 percent to 119.76 yen. The British pound strengthened 0.6 percent to $1.4894, snapping a six-day loss. Japan’s currency declined against all 16 of its most-traded counterparts and Treasuries slumped as demand for safer assets waned. The yield on the benchmark 10-year Treasury note rose 14 basis points to 3.57 percent, according to data compiled by Bloomberg. It was the biggest increase since March 24. Yields on 10-year Japanese government bonds climbed as high as 1.305 percent, the highest level since April 27. Won, Ringgit “EU finance ministers have rushed to ‘shock and awe’ the markets,” Mitul Kotecha, head of global currency strategy at Credit Agricole CIB, wrote in a note to clients. “The package will likely lead to stabilization of markets in the next day or so but the question further out is whether it will lead to a sustained improvement in confidence.” The South Korean won climbed 2.3 percent to 1,129.35 per dollar, while the Malaysian ringgit advanced 2.1 percent to 3.2054 per dollar. Overseas investors sold more Korean shares than they bought for a fifth straight day, following net sales of $2 billion last week. South Korea’s benchmark Kospi stock index rose 1.6 percent, heading for the biggest gain since April 21. Daewoo International Corp. climbed as much as 5.9 percent after Chosun Ilbo and MoneyToday reported that Posco may be the preferred bidder for the trading company after beating a rival offer from the Lotte Group. Posco and Lotte officials declined to comment on the reports. Currency Swaps Currency swaps in South Korea showed an easing in hoarding of dollars, the leading currency for global finance and trade. The one-year basis swap, in which two parties exchange floating interest rates for the dollar and the won, narrowed three basis points to minus 159 basis points. It’s still up from as low as 99 basis points a month ago, signaling that investors are willing to receive reduced won interest payments to obtain dollars. “Asian currencies and markets are recovering on news of the European package,” said Richard Yetsenga, a global currency strategist at HSBC Holdings Plc in Hong Kong. “This a normalization process. But we are not out of the woods yet.” The Markit iTraxx Asia index of credit-default swaps on 50 investment-grade borrowers outside Japan fell 22 basis points to 115 basis points, according to Deutsche Bank AG. The index is on course for its first fall in seven days and its biggest drop since May 7, 2009, according to CMA DataVision in New York. Lower Risk Australia’s risk benchmark also plunged the most in 12 months, tumbling 30 basis points to 101.5, according to Nomura Holdings Inc. and CMA. The Markit iTraxx Japan index fell 16 basis points to 114, the most since Dec. 1, Morgan Stanley and CMA prices show. Crude oil rose for the first time in five days, gaining 2.3 percent to $76.85 a barrel in New York. Oil prices will likely return to $80-to-$85 a barrel once the debt crisis in Greece is resolved, Algerian Energy Minister Chakib Khelil said yesterday. Concerns over Europe’s debt dragged the Reuters/Jefferies CRB Index of 19 raw materials down by 5.9 percent last week, the biggest weekly slide since Dec. 5, 2008. Europe’s “showing of solidarity is a positive development,” said Toby Hassall, commodity analyst at CWA Global Markets Pty in Sydney. “It brings back some risk appetite that certainly got pounded last week.” To contact the reporter for this story: Darren Boey at in Hong Kong or dboey@bloomberg.net; Saeromi Shin in Seoul at sshin15@bloomberg.net.

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