By Mike Dolan

LONDON (Reuters) - World stocks surged on Friday on hopes the U.S. government and central bank will act to alleviate a crisis in subprime, or poor credit quality, U.S. mortgages and ease a global bank lending squeeze the problem has triggered.

Safe-haven U.S. Treasuries, European and Japanese government bonds fell while the yen JPY= touched near one-week lows against the euro and the dollar as demand for riskier assets funded by the low-yielding Japanese currency rose.

Asian stocks climbed more than 2 percent and European stocks added around 1 percent. Wall Street looked set for a strong start.

The latest bullishness came after news that U.S. President George W. Bush will propose reforms later on Friday to help struggling homeowners with subprime mortgages.

Markets were also boosted by speculation Federal Reserve Chairman Ben Bernanke may signal a further easing of policy in a speech on "Housing and Monetary Policy" later on Friday -- markets are already betting the U.S. central bank will cut interest rates at its September 18 policy meeting.

"It's expected that Bush will say something on the lines that the government will help sub-prime mortgage owners who are in danger of losing their houses. That will be seen as positive, limiting losses in the property sector," Tobias Thygesen, senior analyst at Danske in Copenhagen.

"Markets are (also) expecting the Fed to cut by 75 basis points by the end of the year, unless Bernanke takes issue with current market pricing."

Some analysts said a coordinated approach to the mortgage hiatus from White House and Fed officials could be key.