Global Stocks Climb, Euro Rises on Bailout Plan; Banks Advance

Stocks rallied worldwide, with the MSCI World Index rebounding from its worst week on record, after governments in Europe, the U.S. and Asia agreed to support banks and combat the credit crisis.UBS AG, Deutsche Bank AG and ING Groep NV jumped more than 10 percent after European leaders agreed to guarantee new bank debt. Morgan Stanley surged 34 percent in Germany. The euro climbed the most in three weeks against the dollar, and oil rose from a 13-month low on speculation the bailout may avert a collapse of the financial system that threatens economic growth. ``They brought out the heavy artillery,'' said Aurore Wannesson-Raynaud, a strategist at Axa Investment Managers in Paris, which oversees about $830 billion. ``It's possible that the worst is behind us. We should see better days ahead.''The MSCI World Index added 2.3 percent to 931.13 at 10:40 a.m. in London. The index tumbled 20 percent last week and is still down 41 percent this year. Futures on the Standard & Poor's 500 Index rose 4.9 percent. Europe's Dow Jones Stoxx 600 Index advanced 5.2 percent, while the MSCI Asia Pacific excluding Japan Index gained 7.4 percent. Stocks rallied after the U.S. Federal Reserve said central banks will offer financial institutions unlimited dollar funds and Europe pledged to guarantee bank debt issues and permit governments to buy stakes and recapitalize some distressed financial companies.National benchmark indexes climbed more than 4 percent in all of the 17 western European markets that were open. The U.K.'s FTSE 100 jumped 4.6 percent as BHP Billiton Ltd. and Royal Dutch Shell Plc rose. Germany's DAX advanced 5.8 percent. France's CAC 40 increased 5.8 percent as Total SA gained. Bank Bonds The cost of protecting bank bonds from default fell after the U.K. pledged 37 billion pounds ($64 billion) for Royal Bank of Scotland Group Plc, HBOS Plc, and Lloyds TSB Group Plc.``There's a certain sense of relief,'' said Benoit de Broissia, an equity analyst at KBL Richelieu Gestion in Paris, which oversees $5.5 billion. ``The banking system is the lung of the economy, so it has to be supported.'' The euro rose 1.9 percent, the most since Sept. 22, to $1.3657. It advanced 1.7 percent to 137.21 yen. Money-market rates may decline after central banks offered unlimited dollar funds. The London interbank offered rate, or Libor, for three-month dollar loans will drop 9 basis points to 4.73 percent today, according to David Buik, a market analyst at BGC Partners.The cost of borrowing in euros for one week fell the most since Dec. 28, according to the European Banking Federation.