US STOCKS-Futures jump on bank rescues; Morgan higher

* Global efforts to pump cash into banks buoy markets

* Morgan Stanley jumps as news of Japanese deal eyed

* Credit markets show signs of loosening up

By Ellis Mnyandu

NEW YORK, Oct 13 (Reuters) - U.S. stock index futures soared on Monday as a push by governments around the world to pump money into the clogged banking system sparked relief among investors and credit markets showed signs of loosening up.

Stock markets leaped in Asia overnight, and in Europe, where the FTSEurofirst 300 , an index of leading European shares, shot up nearly 6 percent. Benchmark U.S. indexes were poised to open up about 5 percent or more after Wall Street capped its worst week ever on Friday.

Governments stepped up efforts to restore confidence in the tottering banking system by providing multibillion-dollar bank bailouts following weekend talks in Washington.

"The global markets are giving a nod of approval to what the governments, central banks and the U.S. Treasury are doing to boost confidence in the market place," said Peter Cardillo, chief market economist at Avalon Partners in New York.

"What we could see is a market that begins to stabilize. Obviously there's some questions about the plans. Are we going too far? Are we all becoming socialist? But the bottom line: the market needed to get some concrete plan and I think finally we've gotten something that's going to restore confidence."


S&P 500 futures SPc1 rose 46.70 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures DJc1 jumped 380 points and Nasdaq 100 NDc1 futures climbed 46.70 points.

U.S. trading was likely to be light, however, with the U.S. bond market closed for the Columbus Day holiday. Japanese markets were also closed for a holiday on Monday.

Britain said it would spend up to 37 billion pounds ($63.95 billion) buying into top UK banks and Germany and France took similar steps. In the United States, Treasury Secretary Henry Paulson said Washington was developing plans to buy equity in financial institutions to halt the prolonged market turmoil.

Before the bell, the Financial Select Sector SPDR XLF.A, an exchange-traded fund which tracks the performance of the Standard & Poor's 500 financials group, jumped 7.6 percent.

Shares of Morgan Stanley rose more than 30 percent to $12.75 before the bell amid news that Japan's Mitsubishi UFJ Financial Group is seeking more favorable terms for its $9 billion investment deal with the U.S. bank.

The Japanese lender will still buy a 21 percent stake from Morgan Stanley for $9 billion, but will amend the terms to include only convertible preferred shares and no common stock, a person briefed on the matter said.

Spain's Banco Santander is in advanced talks to buy full control of Sovereign Bancorp Inc in a deal valued at $2.5 billion, according to a source familiar with the matter. Before the bell, Sovereign Bancorp shares jumped more than 11 percent to $4.24.

In one sign that credit markets may be loosening up, the cost for banks to borrow from each other dollars, sterling and euros over three months fell. (Editing by James Dalgleish)