Tokyo joins the party

Nikkei posts record gain of 14% as global markets rally ahead of U.S. bank rescue plan.

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TOKYO (CNN) -- Japan's Nikkei index posted an impressive rally Tuesday, surging to a single-day record gain of 14.2%, at least partially sparked by anticipation of U.S. government investment in its ailing banks.

"Last week the Nikkei got hit the hardest, down more 20%. Now it surges the highest," said Jesper Koll with Tantallon Capital Research in Tokyo. "The system is starting to work. We can see that credit markets are starting to stabilize."

European markets opened strong for a second straight day. London's FTSE-100 was up 5.2%, Frankfurt's DAX rose 4.7% and Paris' CAC-40 climbed by 5%.

U.S. stock futures rose, indicating a higher open for the major indexes as investors awaited news on the U.S. plans.

Although Japan - which was closed Monday for a holiday - had the most dramatic gains, Asian and Pacific markets were up across the board.

South Korea's KOSPI index gained 6.1% and Australia's All Ordinaries picked up more than 4%.

Taiwan's Weighted index - one of the few Asian markets to lose ground on Monday - showed renewed strength, gaining 5.4%. Singapore's Straits Times index was up nearly 5% and Mumbai's BSE SENSEX was up about 3%.

The Bush administration is set to unveil sweeping measures to stabilize the nation's financial system later Tuesday.

Government officials are expected to announce an investment of up to $250 billion in banks, according to a person briefed on the proposal. The plan also calls for the FDIC to back up senior bank debt for three years - a move that would strengthen banks' financial footing.

President Bush will meet with his working group on financial markets at 7:30 a.m. ET and make a statement at 8:05 a.m.

Then Treasury Secretary Henry Paulson will lead a group of officials making the announcement at 8:30 a.m. Paulson, Federal Reserve Chairman Ben Bernanke, FDIC Chairwoman Sheila Bair and Securities and Exchange Commission Chairman Christopher Cox are among the officials expected to attend.

The expected moves would mirror similar steps taken by European nations early Monday. Those efforts helped spark a rally overseas that sent European stock prices soaring.

Wall Street followed, with the Dow Jones industrial average jumping 936 points, or 11%, to mark the blue chip average's largest ever one-day point gain.

Monday's rally was a dramatic turnaround. Last week was the Dow's worst ever, capping a stunning eight-session selloff that seared off 2,400 points. That represented a 22% decline in the Dow, the worst since at least the 1930s, and represented some $2.4 trillion in market value. staff contributed to this story. To top of page

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