* MSCI world equity index up 2.7 pct at 232.44
* Stocks, oil, risky assets rise after sweeping rescue plan
* Interbank rates ease; central banks pledge liquidity
By Natsuko Waki
LONDON, Oct 13 (Reuters) - World stocks jumped on Monday from last week's four-year low after policymakers around the world took new and drastic steps to rescue banks and prevent the global economy from sinking into recession.
Oil jumped nearly 5 percent from its 13-month low while government bonds tumbled after Britain injected 37 billion pounds ($63.95 billion) buying into leading UK banks while Australia and New Zealand guaranteed all bank deposits. Germany, France and Italy are expected to unveil similar moves later.
The interbank cost of borrowing three-month sterling and euro funds eased after the bank rescue measures. European central banks also said they would lend out as much U.S. dollar liquidity as commercial banks need in a further joint bid to tame money market tensions.
"We are arguably now near the end point in terms of the extremely violent sell off in equities and widening in spreads," said Sean Maloney, bond strategist at Nomura.
"However, the recovery process is likely to be very long winded and will likely take about as long as the crisis." MSCI world equity index <.MIWD00000PUS> rose 2.7 percent after tumbling 20 percent last week to the four-year low.
European banking stocks rallied more than 7 percent <.SX7P>.
"Despite prospects of a worsening economic crisis, we believe that the nationalisation of parts of the banking system could be viewed as the defining moment that marked the start of the end of the financial crisis," Philip Finch, global banks analyst at UBS, said in a note to clients.
Not all the equity markets had a chance to react to rescue measures as financial markets in Japan were closed for a public holiday.
GLASS HALF EMPTY?
Money markets -- the source of the wider credit stress for more than a year -- also responded to new bailout plans to tackle the worst financial crisis in 80 years.
Interbank rates for three-month dollar funds fell briefly to
4.1 percent, according to indicative prices on Reuters
"Is all of this enough to stop the rot, and even set us on the road towards a build-up in confidence? The glass can be seen as half-full or half-empty," says Ciaran O'Hagan, interest rate strategist at Societe Generale in Paris.
Emerging stocks <.MSCIEF> jumped 3.7 percent after hitting a three-year low.
U.S. crude oil
December bund futures
The dollar <.DXY> fell half a percent against a basket of
major currencies while the euro jumped 0.7 percent to $1.3656
(Additional reporting by Emelia Sithole-Matarise; editing by Chris Pizzey)