US to pump $250 bln into banks, Bernanke reassures

* U.S. to inject $250 billion into banks

* Bernanke says measures to restore normality to markets

* Japan to bolster regional banks

By Mike Peacock and Elaine Lies

LONDON/TOKYO, Oct 14 (Reuters) - The United States will announce plans on Tuesday to inject $250 billion into its banks, following similar, concerted measures in Europe to revive money markets and stave off global recession.

The U.S. Treasury is due to unveil its plan at 1230 GMT with about half of the total figure likely to go to the top nine U.S. banks to get them lending to each other again, people familiar with the plan said.

Federal Reserve Chairman Ben Bernanke said in an article on the Wall Street Journal's website that the measures, which he did not detail, constituted a broad-based attempt to end the crisis which began with collapse of the U.S. housing market and now threatens industry and jobs worldwide.

"These steps will allow us to restore more normal market functioning and encourage private capital to further support the reinvigoration of financial markets," he wrote.

The Treasury will buy stakes in Bank of America Corp , Wells Fargo , Citigroup, JPMorgan Chase & Co , Goldman Sachs , Morgan Stanley and Bank of New York Mellon Corp , said two sources speaking on condition of anonymity.

Media reports said State Street Corp and Merrill Lynch would also receive a capital injection.

Japan joined the global push, saying it could inject public funds into regional banks to make sure small firms can get cash.

Similar plans in Europe helped restore some confidence among investors on Monday. London, Berlin and Paris offered direct capital injections for banks and to underwrite interbank lending to revive frozen money markets that threaten cash-strapped businesses as well as the banking system itself.

Germany approved a rescue plan worth up to 500 billion euros ($679 billion) for its banks and France put up a total of 360 billion euros.

Britain, which has led the way with a twin blueprint of bank equity stakes and money market support, had already pledged 250 billion pounds to guarantee lending between banks and stumped up 37 billion pounds to buy into its troubled financial giants.

Even the Gulf with its oil revenues is acting. The United Arab Emirates will pump 70 billion dirhams ($19 billion) of emergency funding into its banking sector.

RECESSION THREAT NOT BANISHED

Markets gave a thumbs up to government action around the globe. Asian stocks surged, with Japan's Nikkei up more than 14 percent -- the biggest one-day gain in its 58-year history while European shares rose around 4 percent.

"Investors are peeping out of their bomb shelters," said Sean Callow, currency strategist at Westpac.

Many stock markets shed as much as 20 percent last week as panic gripped and experts said that while financial meltdown may have been averted, a global recession had not.

Even if the world's major economies manage to turn their ships around, troubles lurk elsewhere.

Officials from Iceland, driven close to collapse as frozen credit markets caused its banks to fail, are in Moscow for talks on an emergency loan that could be worth billions of euros.

Pakistan's foreign reserve situation is "in distress", but it can still meet upcoming debt obligations of up to $3 billion, the country's top economic official said.

Ukraine will ask the International Monetary Fund for a funding programme, according to a senior IMF official.

Some relief was evident in money markets although they were far from operating normally.

In London, interbank rates for overnight dollar deposits were indicated in a range between 1.5 and 3 percent, from around 2-4 percent a day earlier. But three-month dollar deposit rates failed to ease, holding in a range of 4.0-5.4 percent.

On Monday, the Fed, European Central Bank, Bank of England and the Swiss National Bank said they would lend commercial banks as much U.S. dollar liquidity as they needed.

The U.S. administration will also reveal on Tuesday its intentions to allow the Federal Deposit Insurance Corp -- which guarantees bank accounts -- to insure senior preferred debt issued by banks and thrifts for three years, one source said.

That move appeared aimed at unlocking credit markets, vital to business as it faces the danger of recession and to private, individual borrowers.

The U.S. plan to buy stakes in banks marks a quick about-face for Washington policymakers, who until recent days had been focusing on an apparatus to soak up bad assets from banks via a $700 billion fund approved by Congress.

The New York Times said Citi, JPMorgan, Bank of America and Wells Fargo would receive investments of $25 billion each. Goldman Sachs and Morgan Stanley will get $10 billion each. (Editing by Ralph Boulton)