(Adds U.S. market open, NEW YORK dateline, byline) * MSCI world shares index up 1.44% * GameStop shares plunge, silver prices tumble * U.S. stimulus package brightens in Congress NEW YORK/LONDON Feb 2 (Reuters) - Global stock markets surged for a second day on Tuesday, spurred by increased optimism about more U.S. stimulus and recovery, while retail investors retreated from GameStop and their fleeting interest in silver, causing their prices to tumble. The party for the trading frenzy mob that pushed GameStop’s stock up five-fold in a week appeared over as its shares plunged 46.20% to $121.06. GameStop closed on Friday at $325 a share after hitting $483 earlier in the session. ADVERTISEMENT Silver prices also fell on Tuesday, sliding -7.52% to $26.80, after exchange operator CME Group Inc raised margins on its COMEX 5000 Silver Futures contract by 17.9% to their highest since October 2020. CME’s move on silver took the air out GameStop too, with short interest declining to 53% of the stock’s available shares to trade, from 140%, said Tom Hayes, founder and chairman of hedge fund Great Hill Capital LLC in New York. “Everyone’s rushing for the same narrow exit and trying to get off margin, and you have a lot of weak sisters that are coming out of the stock,” Hayes said. “The squeeze is over.” Equity markets rallied as investors saw improved prospects for President Joe Biden’s proposed $1.9 trillion COVID-19 relief package after he met with 10 Senate Republicans to discuss their scaled-back $618 billion plan. Expectations for Alphabet’s Google and Amazon.com earnings after the bell are high, Hayes said. “Very few people want to be short going into that type of earnings report, he said. The Dow Jones Industrial Average rose 1.99%, the S&P 500 gained 1.79% and the Nasdaq Composite added 1.58%. ADVERTISEMENT Positive momentum overnight in Asia carried through to Europe, with the pan-European STOXX 600 climbing 1.33%. Initial European Union estimates showed the euro zone economy contracted less than expected in the fourth quarter of 2020 but is heading for another, probably steeper decline, in the first quarter of 2021. MSCI’s world equity index, which tracks shares in 49 countries, was up 1.50% after posting its strongest day in three months on Monday. MSCI’s gauge of Asia-Pacific stocks outside Japan rose 1.4%. China’s benchmark CSI300 Index gained 1.5%, helped by easing concerns about tight liquidity and declining cases of new coronavirus infections. Japan’s Nikkei 225 added 1%. The dollar rose to two-month highs against the euro on a perceived widening disparity between the strength of U.S. and European economic recoveries from the coronavirus pandemic. A sell-off in the euro after coronavirus lockdowns choked consumer spending in Germany and short-covering in over-crowded dollar-selling positions also strengthened the greenback. The euro was last down 0.31% at $1.2022. The Japanese yen weakened 0.16% at 105.08 per dollar. The Australian dollar pared gains after the country’s central bank said it would extend its quantitative easing program to buy an additional $100 billion of bonds. The Aussie last stood at $0.7602, off the day’s high of $0.7662. With global market sentiment remaining upbeat about U.S. fiscal stimulus, core euro zone government bond yields edged up, with the benchmark German 10-year Bund yield < DE10YT=RR.> around two basis points higher at -0.492%. The 10-year U.S. Treasury note rose 2.4 basis points to 1.1031%. Spot gold prices fell -1.21% to $1,837.74 an ounce. Oil prices rose more than 2%, reaching their highest in nearly 12 months after major producers showed they were reining in output roughly in line with their commitments. Brent crude futures rose $1.35 to $57.7 a barrel. U.S. crude futures gained $1.38 to $54.93 a barrel.