NEW YORK (AFP) — Global stock markets staged spectacular gains Monday as governments pumped hundreds of billions of dollars into banks crippled by the credit crunch, coaxing newly confident investors to buy shares.
Wall Street broke out the champagne after world leaders took massive steps to unlock frozen credit markets, driving the Dow into its biggest rally in 75 years.
Investors cheered worldwide emergency measures to combat the global financial crisis and shore up battered confidence.
US stocks soared more than 11 percent in a powerful rally that accelerated in the final half hour.
The Dow Jones Industrial Average jumped 936.42 points or 11.08 percent to 9,387.61, breaking an eight-session losing streak.
It was the blue-chip Dow's biggest points gain on record and its sharpest percentage rise since 1933 during the Great Depression.
On March 15, 1933 the Dow soared a 15.34 percent, its all-time record percentage gain.
Last week the Dow had plunged 18 percent in its steepest one-week decline, as markets around the world plunged on fears that financial turmoil was spinning out of control and could trigger a global recession.
The tech-heavy Nasdaq jumped 194.74 points (11.81 percent) to close at 1,844.25, while the broad Standard & Poor's 500 index advanced a whopping 104.11 points (11.58 percent) to 1,003.35.
Briefing.com analysts said the S&P 500 percent gain was its largest in 69 years.
In three days of negotiations that ended Sunday, the Group of Seven advanced economies, the International Monetary Fund and the Group of 20 rich and emerging countries agreed to coordinate their battle plans to tackle the crisis.
Investor sentiment got a further boost after the leaders of the 15-country eurozone, following the lead of Europe's financial giant Britain, agreed Sunday on a high-stakes joint bid to pull the world financial system back from the brink of collapse.
"The main message from the weekend meetings is that governments the world over seem to get the severity of the financial crisis now and are intent on taking extreme measures to improve matters," said Patrick O'Hare, analyst at Briefing.com.
"For now, things are moving in the right direction, both on the credit market and stock market fronts," he said.
The US Treasury announced on Monday it was gearing up to buy stakes in a "broad array" of financial firms and would hold a meeting later in the day with leading bankers and the Federal Reserve to discuss a financial market stabilization initiative.
"We said the markets needed 'shock and awe' tactics and the steps that have been taken so far are very significant. If markets (were to) continue to melt down, we would not be surprised by a global guarantee of interbank lending," John Ryding and Conrad DeQuadros at RDQ Economics wrote in a client note.
"The US is expected to outline a comprehensive plan of its own as soon as Tuesday and is likely to include interbank lending and bank debt guarantees, and direct capital injections in financial institutions," they said.
Most European markets ended with double-digit increases. Hong Kong surged 10 percent in earlier Asian trade; Tokyo was shuttered for a holiday.
The London FTSE 100 index of leading shares jumped 8.26 percent to close at 4,256.90 points while in Paris the CAC 40 rose 11.18 percent -- its largest ever one-day gain -- to 3,531.50. The Frankfurt Dax soared 11.40 percent to 5,062.45.
Bucking the trend was Moscow, where Russia's two stock exchanges closed down more than four percent.
Stock markets in the Middle East made a strong comeback led by bourses in the oil-rich Gulf. The Saudi market, the largest in the Arab world, closed up 9.5 percent after plunging to a four-year low Saturday.
"We have had our first significant bounce in the markets for some time now," City Index market strategist Joshua Raymond said in London.
But he cautioned: "It's a dangerous time to start believing we have hit a bottom in the markets. With the volatility here to stay and confidence likely to seesaw for sometime, we are only really going to be able to tell if we have hit a bottom a month after we have done so."
Latin American stocks posted hefty gains. Brazil's Ibovespa surged a record 14.66 percent and Mexico's bourse was up 11.01 percent, its strongest rise in a decade.
But amid the euphoria analyst Ben May at Capital Economics warned that "while the latest coordinated actions are a welcome sign that the (eurozone) region's policymakers are trying to tackle the banking crisis, we still expect a tightening in credit conditions in 2009 to prompt GDP (gross domestic product) growth to slow from around 1.0 percent this year to about zero in 2009."
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