(RTTNews) - Stocks are seeing significant strength in mid-morning trading on Monday, with traders doing some bargain hunting following recent weakness. News of additional government actions to help stem the credit crisis has inspired traders to pick up stocks at reduced levels.

Over the weekend, U.S. Treasury Secretary Henry Paulson confirmed that he is considering plans for the U.S. government to invest in banks. Paulson says that the recently passed $700 billion rescue package gives the Treasury Department authority to inject fresh capital in the system in order to thaw frozen credit markets.

Meanwhile, the Group of Seven finance ministers signed a one-page statement pledging to work together to stabilize the markets. There were no specific proposals included in the statement, but the G7 expressed support for plans to partially nationalize a number of banks in the U.K. and U.S.

The Federal Reserve along with the Bank of England, the European Central Bank, the Bank of Japan and the Swiss National Bank also promised to inject unlimited amounts of cash to unfreeze credit. This is the latest in a string of coordinated measures by world central banks to tackle the fast spreading global financial market crisis.

Peter Boockvar, equity strategist at Miller Tabak said, “The extraordinary steps that governments around the world have announced to stabilize the banks and interbank lending hopefully brings us to the end of this phase of the great deleveraging story and that concerns with massive bank failures and a collapse of the world’s financial system can be put to rest.”

In other news, Japanese bank Mitsubishi UFJ Financial Group revealed that it has invested $9 billion in Morgan Stanley (MS) as part of the strategic and capital alliance that the companies announced in late September.

Under the terms of the revised agreement, MUFG will receive $7.8 billion in convertible preferred stock with a conversion price of $25.25 per share. The company will also receive $1.2 billion in non-convertible preferred stock.

The major averages have moved to the upside in recent trading, although they remain off the highs set shortly after the open. The Dow is currently up 364.63 at 8,815.82, the Nasdaq is up 78.91 at 1,728.42 and the S&P 500 is up 41.88 at 941.10.

Sector News

Steel stocks are turning in some of the market’s best performances in mid-morning trading, contributing to a 10.8 percent gain by the Amex Steel Index. The gain by the index comes after it ended Friday’s trading at its worst closing level in over two years.

Bargain hunting is contributing to the strength among steel stocks, which are moving higher along with the broader resource sector. Concerns about the outlook for demand helped to drag resource stocks sharply lower in recent sessions.

Health insurance stocks are also rebounding after seeing significant weakness in recent sessions, with the Morgan Stanley Healthcare Payor Index currently up 7.5 percent after ending Friday’s trading at a more than three-year closing low.

UnitedHealth (UNH) is helping to lead the sector, with the health insurance provider currently posting a 23.7 percent gain. Aetna (AET), WellPoint (WLP), and Humana (HUM) are also posting notable gains.

Significant strength is also visible in a variety of other sectors, reflecting broad based strength in the markets. Telecommunications, brokerage, and airline stocks are showing particularly strong upward moves.

On the hand, gold and real estate stocks are bucking the uptrend by the broader markets, with the weakness among gold stocks coming amid a decrease by the price of the precious metal.

Stocks Being Driven By Analyst Comments

After trending lower for much of the past month, shares of GameStop (GME) are regaining some ground in morning trading. Shares of the video game retailer are currently up 12.2 percent, moving further off the eighteen-month closing low set last Thursday.

The gain by GameStop comes after Piper Jaffray upgraded its rating on the company’s stock to Buy from Neutral. Piper Jaffray said that the company’s fundamentals are strong, adding that its stock is attractively valued following the recent weakness.

Shares of St. Jude Medical (STJ) have also shown a strong upward move after JP Morgan upgraded its rating on the medical device maker to Overweight from Neutral. St. Jude is currently up 14.2 percent after ending last Friday’s trading at a two-year closing low.

On the other hand, shares of Barnes & Noble (BKS) are currently down 5 percent after Goldman Sachs downgraded its rating on the bookseller to Sell from Neutral. Goldman Sachs attributed the downgrade to the stock’s recent outperformance.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Monday, regaining some ground after falling sharply in recent sessions. Hong Kong’s Hang Seng Index showed a notable upward move, closing up more than 10 percent.

European stocks are also seeing considerable strength, benefiting from news that the European Union agreed to underwrite interbank lending. The French CAC 40 Index and the German DAX Index are currently up 6.4 percent and 8.2 percent, respectively, while the U.K.’s FTSE 100 Index is posting a 4.3 percent gain.

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Posted in Categories: Economy, Eurozone, Japan, Releases, Switzerland, UK, USA.

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