* Shares up in Europe, U.S. on hope downturn moderating
* G20 to give IMF $500 billion boost
* Source says G20 close to $250 billion trade finance deal
* ECB cuts interest rate by less than expected
By Toni Clarke and David Ljunggren
BOSTON/LONDON, April 2 (Reuters) - World leaders agreed on Thursday to tighten financial regulations and increase funding for poor nations, while a U.S. accounting body moved to ease rules for banks that forced billions of dollars of writedowns.
Optimism that G20 leaders meeting in London will find ways to temper the economic crisis drove stocks higher, overshadowing disappointment over a smaller-than-expected interest rate cut by the European Central Bank and data showing a sharp jump in U.S. jobless claims.
As world leaders were meeting to find solutions to the financial crisis, the U.S. Financial Accounting Standards Board moved to give banks more flexibility in valuing troubled assets. The changes, to take effect in the second quarter, could reduce writedowns and soften blows to bank earnings.
The Dow Jones industrial average gained 3.2 percent while the Standard & Poor's 500 Index rose 3.3 percent. Shares in Europe and Japan also rose.
The gains came even as the number of U.S. workers filing new claims for jobless benefits rose to their highest level in more than 26 years last week and the European Central Bank cut its main financing rate by half an expected 50 basis points to 1.25 percent.
The moves by the Group of 20 major developed and emerging economies, combined with expected easing of accounting regulations for U.S. banks, gave investors a modicum of comfort.
"It's also the symbolism of the G20 that there will be coordinated efforts to stimulate the world economy," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
In London's heavily guarded Docklands region, world leaders were set to triple the war chest of the International Monetary Fund to fight the worst economic crisis since the 1930s and impose new curbs on financial markets, monetary sources said.
$500 BILLION BOOST
Monetary sources at the G20 summit said the latest draft communique provided for a $500 billion boost to the IMF's resources, raising to $750 billion the funds it can make available to countries worst hit by the global crisis.
The G20 was also close to agreeing to a finance package worth $250 billion to support global trade flows, a source at the summit told Reuters.
"The leaders are close to agreement that they will insure availability of at least $250 billion over the next two years to support trade finance through export credit and investment agencies and through multilateral development banks," the source said, speaking on condition of anonymity.
"This is a positive step to jump-start global trade flows. It is a significant contribution towards solving the problem," said Eoin O'Malley, senior adviser on international trade at BusinessEurope, a top European business group.
CLIPPING HEDGES
The G20 leaders were expected to agree to submit large hedge funds to supervision for the first time and enhance regulation through a new agency and a beefed-up IMF.
As world leaders gathered, there were plenty of signs of how bad the global crisis had become and growing debate over whether the worst of the downturn has passed.
Highly influential non-farm payroll data for March is due out in the United States on Friday, while in Spain on Thursday data showed the number of people claiming jobless benefits continued to climb steeply in March and at a much higher rate than larger European economies during a fierce recession.
BOTTOMED OUT?
In Britain, where the property market is a key component of consumer confidence, data from home loan company Nationwide reported that house prices rose in March for the first time since October 2007, although the lender cautioned about jumping to conclusions about a housing market rebound.
But there remain plenty of concerns in the corporate sector, with Swedish-Swiss engineering group ABB warning that base orders were deteriorating and that it expected volatility in commodities and currencies to hurt profits this quarter.
ABB, whose rivals include Germany's Siemens and Rockwell in America, said the environment remained challenging despite three large orders won in the first quarter.
While the news about General Motors Corp. and smaller rival Chrysler has been almost universally bleak since U.S. President Barack Obama rejected their restructuring plans on Monday, U.S. auto sales in March also contained a glimmer of hope.
Although down 37 percent in March, their 17th straight month of decline, sales in the world's largest car market were not as bad as expected. (Additional reporting by Marc Jones in FRANKFURT, Kevin Plumberg in HONG KONG, Poornima Gupta and Soyoung Kim in Detroit, Wayne Cole in SYDNEY and Reuters bureaux around the world; Writing by Keiron Henderson; Editing by Richard Hubbard and Steve Orlofsky)