* MSCI world equity index up 0.4 percent at 206.10
* Measures by Japan, Australia help calm corporate fears
* Yen slightly weaker; short-end euro zone yields fall
By Natsuko Waki
LONDON, Feb 3 (Reuters) - World stocks and oil edged up on Tuesday as Japan and Australia stepped up efforts to boost ailing economies, while short-term euro zone yields fell on expectations for a euro zone interest rate cut next month.
Australia slashed interest rates by a full percentage point to a record low of 3.25 percent and unveiled a $26 billion stimulus. The Bank of Japan said it would buy up to $11 billion of shares held by banks.
The U.S. Senate was due to begin a series of votes on $900 billion in tax cuts and new spending President Barack Obama says will help fight the worst economic crisis since the Great Depression.
The moves come as leading companies on both sides of the Atlantic unveil fourth-quarter earnings results, which are expected to show deteriorating profits.
BP said replacement cost net profit fell 24 percent in the fourth quarter to $2.587 billion, missing forecasts given a collapse in crude prices and as its Russian unit reported a big loss.
"It would appear that any strength is fragile, with the markets needing no excuse to pull back. The fear amongst investors is that if we crash through the October lows, we could be facing freefall, with no obvious signs of resistance," said Chris Hossain, senior sales manager at ODL Securities. MSCI world equity index was up 0.3 percent.
London shares were up 0.4 percent. Here, signs that a weakening pound was working in favour of exporting companies boosted some shares.
Vodafone Group, the world's largest mobile phone group by sales, beat third-quarter forecasts for revenues and increased its guidance to reflect foreign exchange movements.
Sterling fell to a 23-year low of $1.3811 last month.
The FTSEurofirst 300 index of leading European shares gained 0.4 percent and emerging stocks rose more than 1 percent.
U.S. crude oil rose to $40.35 a barrel.
EURO ZONE YIELDS LOWER
The ECB meets on Thursday but nobody expects a move this month after the central bank signalled it would leave rates at 2 percent. A rate cut is widely expected in March.
The yield on two-year paper fell to 1.462 percent while the 10-year Bund yield was lower at 3.258 percent.
The 2-10-year bond yield curve steepened to 180 basis points from around 175 basis points late on Monday. Earlier, the curve hit 181, nearing the 182.7 basis points touched late last month, its widest since early 2004.
The March Bund future fell 11 ticks.
The dollar fell 0.2 percent against a basket of major currencies. The yen lost 0.1 percent at 89.55 per dollar after the BOJ's move.
"The move comes in clear BOJ opposition to a suggestion by some leading coalition lawmakers that the government print its own paper notes," Japanese bank BOTM-UFJ said in a note to clients.
"Basically this puts stock support and yen weakness at odds ... The message is: expect a breakdown in correlation between dollar/yen and stocks, which is still unsustainably high." (Additional reporting by Atul Prakash; Editing by Victoria Main)