Japanese stocks rallied, driving the Nikkei 225 Stock Average to its biggest gain on record, as U.S. and European government plans to buy bank stakes boosted confidence that global financial markets will avoid collapse.
The
Nikkei climbed 14.2 percent, rebounding from the worst week in its
59-year history. Sumitomo Mitsui Financial Group Inc. and Mitsubishi
UFJ Financial Group Inc. jumped more than 14 percent as people briefed
on the matter said the U.S. will buy stakes in nine banks. Stocks also
rallied after Japan's government said it may suspend the sale of
state-held shares to boost stocks. Markets were shut for a holiday
yesterday when global equities soared.
The Nikkei jumped 1,171.14
to close at 9,447.57 in Tokyo, with 202 of its constituents climbing at
least 10 percent. The broader Topix index rose 115.44, or 14 percent,
to 956.30, the steepest advance since its inception in 1969.
The
Nikkei tumbled 24 percent last week and the Topix fell 20 percent, the
most on record, as the deepening credit crisis threatened to topple
more financial companies.
Sony Corp. led gains among companies reliant on overseas sales as the yen weakened for a fourth day against the dollar.
Mitsubishi
UFJ, the nation's largest listed bank, rose 14 percent to 810 yen. The
company secured an additional $300 million in annual dividends for its
$9 billion investment in Morgan Stanley after the U.S. securities
firm's shares dropped.
Sony, which gets a quarter of its sales from
the U.S., surged 17 percent to 2,785 yen. A 1 yen change against the
dollar alters Sony's annual operating profit by 4 billion yen ($39
million), the company said in May.
European stocks climbed,
sending the Dow Jones Stoxx 600 Index to its biggest two-day gain on
record, as the U.S. planned to inject $250 billion in banks and urged
the lenders to use the funds to spur economic growth.
Deutsche
Bank AG, Germany's biggest bank, and Barclays Plc, the U.K.'s
second-biggest bank, rallied more than 10 percent. Societe Generale SA
rose 8.2 percent after posting a profit, saying it doesn't need more
capital.
National benchmark indexes advanced in all 18 western
European markets except Belgium, Iceland and the Netherlands. The
U.K.'s FTSE 100 climbed 3.2 percent as BP Plc and Royal Dutch Shell Plc
gained. France's CAC 40 jumped 2.8 percent, led by Total SA. Germany's
DAX rallied 2.7 percent.
Fortis sank more than 70 percent, dragging Belgium's BEL20 and the Netherland's AEX lower.
Iceland's
benchmark stock index plunged 77 percent in the first day of trading
after a three-day suspension following the collapse of the country's
banking industry.
Money-market rates fell in London with the cost
of borrowing in dollars for three months dropping the most since March.
The London interbank offered rate, or Libor, that banks charge each
other for three-month dollar loans slid 12 basis points to 4.64
percent, according to the British Bankers' Association. It was at 4.82
percent on Oct. 10, the highest level since December.
Deutsche
Bank rallied 11 percent to 38.75 euros, while Barclays gained 14
percent to 246 pence. UBS AG, the European lender with the biggest
losses from the credit crisis, added 12 percent to 21.4 francs. Societe
Generale surged 8.2 percent to 53 euros. France's second-largest bank
by market value said it will report ``positive'' net income for the
third quarter. Leaving aside one- time items, profit stood at about 1
billion euros, the bank said.
U.S. stocks gained for a
second day as the government outlined plans to buy $250 billion in
equity stakes in the nation's banks to shore up confidence.
Morgan
Stanley, Citigroup Inc. and Merrill Lynch & Co. added more than 17
percent as Treasury Secretary Henry Paulson urged financial firms to
``deploy'' the new capital to unfreeze credit markets. A worsening
outlook for earnings at Microsoft Corp., Intel Corp. and PepsiCo Inc.
sent computer and consumer shares lower, paring the market's advance.
Morgan
Stanley jumped 21 percent to $21.83. Citigroup added 18 percent to
$18.51, Merrill Lynch gained 18 percent to $20.72. Goldman Sachs Group
Inc. climbed 13 percent to $125. Regional banks KeyCorp, National City
Corp. and Huntington Bancshares Inc. each rallied more than 30 percent.
Paulson
urged banks receiving the capital to use it to spur economic growth and
not hoard it, while not identifying any of the lenders targeted.
President George W. Bush said at the White House that the government's
intention is to preserve and ``not take over'' the free market.
Financial
stocks made up 19 of the 20 biggest gains in the S&P 500, each with
rallies above 15 percent. The S&P 500 measure of banks, insurers
and asset managers climbed 7.2 percent.