* MSCI world index up 1.3 percent at 211.37
* Fed announces new mortgage support programme
* Yen still firmer; oil falls after Monday's 9 percent bounce
By Natsuko Waki
LONDON, Nov 25 (Reuters) - World stocks rose more than one percent on Tuesday after the Federal Reserve unveiled a programme to buy mortgage and consumer-related securities in its latest attempt to support the U.S. financial system.
The Fed will buy up to $600 billion of mortgage-related debt and securities plus $200 billion of consumer debt securities. The announcement boosted European stocks and U.S. futures, which pointed to a firmer open on Wall Street later.
"(The programme) should improve liquidity in asset-backed securities. When you have demand for risk products, that should diminish some appetite of the extreme flight-to-safety that we've seen recently," said Scott Brown, chief economist at Raymond James & Associates at St Petersburg in Florida.
The FTSEurofirst 300 index of leading European shares rose 1 percent, after rallying nearly 9 percent on Monday -- its second biggest one-day percentage rise on record.
MSCI world equity index rose 1.1 percent. U.S. stock futures were up around 2.5 percent.
Washington's announcement late on Sunday that it would shoulder most losses on about $306 billion of Citigroup's risky assets and inject new capital boosted world stocks by 6.6 percent on Monday.
On Monday, Wall Street capped its best two-day gain since the aftermath of the 1987 stock market crash.
Earlier, BHP Billiton fell nearly 40 percent after the top global miner walked away from its hostile offer for rival Rio Tinto. AXA also fell more than 10 percent after the insurer cut its 2008 underlying profit outlook.
Emerging stocks rose 2.7 percent.
The December bund future was still up 18 ticks while U.S. Treasury prices steadied after the benchmark 10-year yield fell to 3.22 percent earlier.
"The equity market rally we saw seems to be pretty much a fleeting affair, consequently Treasuries remained underpinned," said Nick Stamenkovic, bond strategist at RIA Capital Markets.
The yen was up 0.6 percent at 96.50 per dollar while the dollar erased early gains to stand flat on the day against a basket of major currencies.
U.S. crude oil fell 3.8 percent to $52.39 a barrel after rising more than 9 percent on Monday.
Data confirmed that the U.S. economy is half way into recession with third-quarter GDP contracting 0.5 percent. Interest rate futures are fully pricing in the Federal Reserve to cut interest rates by half a percentage point to 0.5 percent in December.
"Although we expect the Fed to lower its Fed funds target rate to zero in January next year, the market has not fully priced in the Fed's zero interest rate policy," JP Morgan said in a note to clients. "Therefore, any negative surprises from the U.S. releases should heighten speculation for more aggressive Fed cuts."