TOKYO - World stock markets soared Monday after Washington announced a bailout of mortgage giants Fannie Mae and Freddie Mac - a move that could help bolster a shaky U.S. housing market and renew global investor confidence.

Japan's benchmark Nikkei 225 index surged or 3.4 percent to 12,624.46, while Hong Kong's Hang Seng index advanced 4.3 percent to 20,794.27. Seoul's Kospi rose 5.2 percent.

In morning trading in Europe, Britain's FTSE 100 was up 3.7 percent, Germany's DAX climbed 3.4 percent and France's CAC 40 was up 4.6 percent.

The U.S. Treasury's decision Sunday to take control of the two financial institutions, which own or guarantee about half of U.S. mortgage debt, removes a big cloud that had been weighing on global markets.

Global investors have been growing increasingly anxious that financial turmoil and fallout from the U.S. credit crunch might trigger a wider global slump or recession.

Japan and Australia applauded the move.

"We welcome the plan as an appropriate measure as it is believed to contribute to stabilizing the financial markets," Japanese Chief Cabinet Secretary Nobutaka Machimura was quoted as saying by Kyodo News.

"I think what the American authorities have done, in the brief look I've had, it is the right thing," said Glenn Stevens, the head of Australia's central bank, at an appearance before a parliamentary committee in the southern city of Melbourne.

"Their implications are likely to be positive for markets because it's a source of uncertainty close to resolution," he said.

Jacky Choi, a Hong Kong-based fund manager at Value Partners Ltd., which manages about $5 billion in assets in Asia, said the U.S. move comes as a relief to the many Asian governments and institutions with the mortgage giants' debt on their books.

He added, however, that Monday's surge didn't necessarily foreshadow a broader turnaround and noted that trading volumes weren't very large in some markets. Many investors were still hesitant to place long-term bets, he said.

"There's not really a sentiment change. People are still reluctant," Choi said. "It takes time for sentiment to recover in a market like this."

For now, the news injected life into financial issues, with major Asian banks the big winners of the day.

Japanese megabank Mitsubishi UFJ Financial Group, Inc. shot up 13 percent, Sumitomo Mitsui Financial Group, Inc. jumped 15, and Mizuho Financial Group, Inc. rebounded 12 percent.

In Sydney, the Commonwealth Bank of Australia rose 7.9 percent, and National Australia Bank 6.4 was percent higher.

Hong Kong's HSBC soared 5.5 percent, and China's biggest lender ICBC rose 3.7 percent.

Nomura Holdings, Inc.