LONDON (AFP) - European stock markets surged in early trading on Monday, mirroring sharp gains won across Asia after the US government seized control of ailing mortgage giants Fannie Mae and Freddie Mac.

In London the FTSE 100 index of leading shares surged 3.55 percent to 5,427.00 points shortly after an initial climb of 1.22 percent at opening.

The Paris CAC 40 jumped 4.13 percent to 4,369.79 points in early trading and Frankfurt's DAX 30 won 2.86 percent to 6,302.18.

"There's only one story that means anything as the new trading week gets underway and that's the nationalisation of Fannie Mae and Freddie Mac that was announced by the Fed over the weekend," said CMC Markets dealer Matt Buckland.

Asian stock markets also surged on Monday as the federal takeovers eased fears of a spiralling global financial crisis, dealers said.

The Tokyo and Hong Kong markets rose more than three percent as investors cheered Sunday's dramatic move in Washington aimed at shoring up the troubled US housing market.

"Whilst this (rescue) underlines the ongoing impact of the credit crunch, the move should take a lot of uncertainty out of the market in one quick move and at the same time stands to offer US consumers a helping hand too," added Buckland.

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