Global stocks rallied overnight, with European shares notching their biggest gain ever, as a United States plan to unwind a deadly credit crisis bolstered investor confidence and sent such safe-havens as bonds and gold sharply lower.
The stock rally added to sharp gains the day before, which had marked the best day on Wall Street in six years. Europe’s leading share index surged 8.19 per cent, its biggest one-day percentage gain on record.
The yen fell to a 10-day low against the US dollar as American authorities moved to thaw seized-up credit markets that had caused equities to tumble and had boosted risk aversion around the world.
Gold futures in New York dropped 4 per cent in heavy profit-taking and the price of European and US government debt slumped after Washington said it was crafting a sweeping program to tackle toxic bank assets that have choked the financial system.
Financial stocks in the United States and Europe led the charge. UBS surged 31.66 per cent, Barclays advanced 29.24 per cent and HBOS jumped 28.91 per cent in Europe.
In the United States, Goldman Sachs gained 25 per cent, Citigroup jumped 24 per cent, Merrill Lynch rose 25 per cent, Bank of America soared 36 per cent and Wachovia climbed 32 per cent.
US Treasury Secretary Henry Paulson called for the US government to spend hundreds of billions of dollars to take toxic mortgage assets off the books of financial firms to restore financial stability in battered capital markets.
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