Stocks in Europe, Asia, U.S. Futures Surge; Banks Advance

By Sarah Jones

Sept. 19 (Bloomberg) -- Stocks from London to Moscow and Shanghai surged after the U.S. government started planning new laws to halt the credit-market meltdown and U.K. and American regulators cracked down on short sellers.

Deutsche Bank AG and Credit Suisse Group climbed 15 percent while Macquarie Group Ltd., Australia's largest investment bank, soared 38 percent after U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke proposed moving troubled assets from the balance sheets of financial companies into a new institution. HBOS Plc advanced 52 percent as the U.K.'s Financial Services Authority banned short selling financial shares for the rest of the year.

European shares rebounded from four straight days of declines spurred by the collapse of Lehman Brothers Holdings Inc. and American International Group Inc. U.S. shares rallied the most in six years yesterday, while the MSCI Asia Pacific Index rebounded from a three-year low today.

``Hugely significant stories of government intervention is going to dominate market sentiment,'' said Matt Buckland, a London-based dealer at CMC Markets. ``There seems to be a coherent belief that this could actually be sufficient to draw a line under what has been a tumultuous 18 months for the markets.''

The Dow Jones Stoxx 600 Index added 2.7 percent to 263.77 at 8:09 a.m. in London. Futures on the Standard & Poor's 500 Index climbed 3.2 percent, and the MSCI Asia Pacific Index surged 4.8 percent.

Weekly Performance

The Stoxx 600 had declined 8.4 percent this week before today as bank lending seized up following Lehman's bankruptcy filing and the U.S. government's takeover of AIG. More than $19 trillion was wiped off global stock-market value since Oct. 31 as more than $500 billion in credit losses and writedowns at banks pushed the world economy toward a recession.

Paulson and Bernanke have proposed moving troubled assets from the balance sheets of American financial companies into a new institution. Congressional leaders said they aim to pass legislation soon. The initiative, which may also insure money- market funds, is aimed at removing the devalued mortgage-linked assets at the root of the worst credit crisis since the Great Depression.

The Dow Jones Industrial Average yesterday jumped 617 points yesterday from its lows. Senator Charles Schumer of New York proposed a new agency to pump capital into financial companies and also urged a ban on short-selling shares of Wall Street brokerages.

SEC, Short Selling

The Securities and Exchange Commission has stiffened other regulations aimed at curbing manipulative trading and halted short selling of financial companies.

Deutsche Bank, Germany's largest bank, jumped 15 percent to 57.73 euros, while of Credit Suisse, Switzerland's second- largest bank, climbed 14 percent from the close in Zurich. Barclays Plc, the U.K.'s third-largest bank, rallied 58 percent to 475 pence.

The U.K. Financial Services Authority said today its ban on short selling of financial shares will apply to 29 companies including Barclays, HBOS, and Bradford & Bingley Plc. HBOS gained 52 percent to 263 pence.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.