Markets Set to Rally on Europe Moves

European stocks were seen rallying  on Monday, as moves by European countries to stabilize the banking system could reassure investors and help the market bounce back after a dismal week.

Spreadbetters are looking for London's FTSE to open up 178 to 196 points, or as much as 5 percent higher, Frankfurt's DAX to gain 168 to 214 points, or as much as 4.7 percent, and Paris' CAC 40 to rise 165 to 168 points, or as much as 5.3 percent in early trade.

After an emergency meeting in Paris over the weekend, European governments agreed to provide capital for banks caught short of funds because of frozen money markets and to insure or buy into new debt issues.

French President Nicolas Sarkozy said people could expect a flurry of coordinated announcements of financial details on Monday from national capitals across Europe, notably Paris, Berlin and Rome on Monday afternoon.

Germany is expected to unveil a rescue package for its banks worth around 400 billion euros ($549 billion), an official in Chancellor Angela Merkel's conservative party said on Sunday.

Sources familiar with the situation said Britain could pump about 45 billion pounds ($77.77 billion) into four troubled major banks and take big stakes as part of a recapitalisation due to be unveiled on Monday.

Royal Bank of Scotland, HBOS, Lloyds and Barclays were in line to receive the billions of pounds from investors and taxpayers.

Also in the banking sector, Spain's Banco Santander was in advanced talks late on Sunday to acquire full control of Sovereign Bancorp, the largest remaining U.S. savings and loan, a source familiar with the matter said.

Japanese markets were closed on Monday for a holiday.

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