GLOBAL MARKETS-Stocks jump on Japan and M&A, yen dips

* Progress at Japan nuclear plant lifts risk appetite

* U.S. stocks soar on AT&T's T-Mobile deal

* U.S.-traded Nikkei futures advance

* Euro touches $1.42 vs USD on rate hike expectations (Updates prices, adds Nikkei futures, Warren Buffett comment on Japanese stocks)

By Rodrigo Campos

NEW YORK, March 21 (Reuters) - Global stocks rallied on Monday as risk appetite returned following progress in resolving Japan's nuclear crisis, while the yen slipped on speculation of more central bank intervention.

Oil prices rose but eased from session highs after Western forces launched a second wave of air strikes on Libya.

The yen fell on investor concerns over more coordinated actions by the Group of Seven countries.

U.S. stocks rose more than 1.5 percent as investors welcomed AT&T Inc's $39 billion offer to buy T-Mobile USA from Deutsche Telekom in what would be the world's biggest deal this year and Germany's biggest in a decade.

The gains in U.S. stocks followed a second straight week of losses over concerns about unrest in oil-producing North Africa and the Middle East. Japan's earthquake and tsunami and the ensuing nuclear crisis deepened investors' concerns about a continued global economic recovery.

"The fact that companies are confident to do big deals gets people thinking that the environment may not be too bad, that there is liquidity out there in the market. It opens doors for other, larger M&A deals," said John Canally, investment strategist at LPL Financial in Boston.

"More incrementally positive news from Japan in terms of the nuclear situation is helping the market," Canally said.

The pan-European FTSEurofirst 300 .FTEU3 index of top shares was up 1.7 percent and the MSCI world share index <.MIWD00000PUS> jumped 1.6 percent, the largest daily gain in seven weeks.

The Dow Jones industrial average <.DJI> gained 185.42 points, or 1.56 percent, at 12,043.94. The Standard & Poor's 500 Index <.SPX> was up 19.29 points, or 1.51 percent, at 1,298.49. The Nasdaq Composite Index <.IXIC> added 49.81 points, or 1.88 percent, at 2,693.48.

Engineers rigged power cables to all six reactors at Japan's Fukushima complex and started a water pump at one to reverse overheating. Still, The World Health Organization said radiation in food was more serious than previously thought. For details, see [ID:nL3E7EK08V]

Japan's markets were closed for a holiday, but the MSCI index of Asian stocks outside of Japan <.MIAPJ0000PUS> rose 1.4 percent.

Japanese equities, battered after the disaster ten days ago, got a boost after billionaire investor Warren Buffett said the earthquake and tsunami are the kind of extraordinary events that create a buying opportunity for shares in Japanese companies. [ID:nTOE72I00I]

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U.S. dollar-denominated Nikkei futures NKc1 rose 2.5 percent and have gained roughly 11 percent in the last three sessions.

The yen added to losses, with speculators wary of more coordinated actions by the Group of Seven countries. The dollar rose 0.4 percent for the day to 81.13 yen after joint G7 intervention last week hoisted the greenback nearly 4 percent versus the Japanese currency.

The G7 acted after the yen jumped to a post-World War Two record high of 76.25 yen to the dollar last Thursday. More intervention is expected if it climbs again.

The euro briefly rose above $1.42 against the U.S. dollar for the first time since November before trading near break-even as markets braced for a euro zone interest rate hike as soon as next month.

Brent crude for May delivery LCOc1 was about $1.50 at $115.39 a barrel after the U.N.-mandated attacks on Libya aimed at protecting civilians caught up in a revolt against the nation's leader, Muammar Gaddafi. [ID:nLDE72J0RL]

Libya Graphics

http://link.reuters.com/neg68r

Japan disaster in figures

http://r.reuters.com/ser58r

Japan disaster Top News page

[nTOPNOW4]

Picture, graphic packages:

http://r.reuters.com/wyb58r

Brent has risen nearly 22 percent this quarter, with prices buoyed by uncertainty over the unrest in North Africa and the oil-producing Gulf region.

"The key is really how Saudi (Arabia) and Iran play out. Cool heads need to prevail. It's contained at the moment, but if things worsen, you see a Mideast premium very quickly," said Jonathan Barratt, managing director of Commodity Broking Services.

U.S. Treasuries prices were hurt by reduced safe-haven demand and extended losses after the Treasury said it will begin to sell $142 billion of its agency-guaranteed mortgage-backed securities. [ID:nN21219886]

Benchmark 10-year notes were last down 18/32 in price to yield 3.33 percent, up from 3.28 percent late Friday.
* For Reuters Global Investing Blog click on

http://blogs.reuters.com/globalinvesting * For the MacroScope blog http://blogs.reuters.com/macroscope * For hedge fund blog http://blogs.reuters.com/hedgehub
(Additional reporting by Wanfeng Zhou, Angela Moon, Karen Brettell, Ian Chua, Joanne Frearson, Blaise Robinson, Alejandro Barbajosa and Anirban Nag; editing by Ken Barry and Jeffrey Benkoe)