* MSCI world equity index up 0.9 percent at 219.77
* Ford results lift mood, Ifo, banking results also help
* UK GDP hits sterling, boosts govt bonds
By Natsuko Waki
LONDON, April 24 (Reuters) - World stocks and the euro rose on Friday after better-than-expected Ford Motor results and an upbeat key German corporate sentiment survey, while disappointing UK growth data knocked sterling.
Ford posted a smaller-than-expected first-quarter loss, saying it was on track to at least break-even in 2011 and did not expect to seek U.S. government loans. U.S. stock futures were pointing to a firmer open on Wall Street later. Earlier in Europe, risky assets were buoyed by the Ifo Institute's business climate index which rose to 83.7 in April, against a consensus for a rise to 82.3. It added to hopes that the downturn in Europe's largest economy may be easing.
"It is very easy to simply run with the pack and to dismiss first signs of green shoots. However, these green shoots are there," said Carsten Brzeski, economist at ING Financial Markets.
"Is this the end of the crisis? No, it is not, but the free fall of the economy seems to have come to an end, leading to a fragile stabilisation in the second half of the year."
MSCI world equity index rose 0.9 percent on the day. If the index ended up on the week, it would be the seventh straight week of gains. The FTSEurofirst 300 index rose 1.3 percent on the day.
U.S. stock futures were up around 0.7 percent, pointing to a firmer open on Wall Street later.
The focus is also on banks after big U.S. regional banks, including PNC Financial Services Group and Fifth Third Bancorp, reported better-than-expected first-quarter earnings on Thursday.
Earnings results have been so far mixed with investors reacting more sensitively to positive earnings reports. In Europe so far, 30 companies in the DJ Stoxx 600 index have reported their earnings, of which 18 beat estimates and 12 missed forecasts.
"The cyclical stocks will continue to benefit from less weak economic conditions than people feared," said Darren Winder, equity strategist at Cazenove.
"The defensive stocks are also attractive (after recent falls), so the market should get more breath. If it gets more breath it will help its advance."
Emerging stocks rose 0.6 percent.
UK SHOCK
Sterling fell as low as 90.75 pence per euro after data showed the UK economy shrank 1.9 percent on the quarter in the Q1, the biggest contraction since Q3 1979.
The low-yielding yen, which tends to attract safety-seeking flows, hit a 4-week high against the dollar of 96.65 per dollar . The currency was boosted by nervousness surrounding the looming outcome of the U.S. government's stress tests on 19 major domestic banks, due on May 4.
"Though the end of the stress test process is supposed to bring much needed transparency, we fear that the cyclical rise in defaults will cause painful losses - given the unprecedented rise in the banks' balance sheet over the past 10 years - which the stress test is likely to highlight," Societe Generale said in a note to clients.
The dollar fell 0.7 percent against a basket of major currencies. The euro rose 0.9 percent to $1.3261, hitting the session high after the Ifo survey.
The June bund futures rose 39 ticks.
U.S. crude oil rose 0.4 percent to $49.86 a barrel. (Additional reporting by Dominic Lau; Editing by Andy Bruce)