* Stocks pare gains after S&P sees ratings downgrades
* Wall Street set for negative start
* Dollar boosted against basket of currencies
By Jeremy Gaunt
LONDON, Feb 25 (Reuters) - World stocks rose on Wednesday from the previous day's six-year lows but gains were capped by the threat of future sovereign ratings downgrades, a prospect that also boosted bonds and the dollar.
Wall Street looked set for a negative start.
Standard & Poor's told Reuters it expects more sovereign ratings downgrades than upgrades this year compared with a year ago as global economies battle a deepening recession.
"There were more (sovereign) downgrades than upgrades last year and we expect that margin to widen this year," David Beers, S&P head of sovereign ratings, said.
This took the steam out of stock markets, which had been gaining after some recent steep losses.
MSCI's main world equity index was up 0.5 percent, about half its earlier gains, while the FTSEurofirst 300 index was up 0.2 percent after earlier gaining 1.5 percent.
Emerging stocks were up 0.9 percent.
Federal Reserve Chairman Ben Bernanke had lifted the mood somewhat on Tuesday by signalling that nationalisation of big U.S. banks was not at hand.
Concerns that Washington might nationalise big U.S. banks -- which would wipe out shareholders and add to the fiscal burden -- had weighed on stocks and other risky assets.
"The market is having a technical rebound after a long series of negative sessions," said Alexandre Le Drogoff, technical analyst at Aurel BGC. "The drop had been excessive."
DOLLAR BOOSTED
The dollar was also boosted as a relatively safe haven after the S&P comments.
The FX market, however, has mainly been focusing on Japan's economic and political ills and a long-held link between rising share prices and a stronger yen has been broken.
Latest data showing a sharp drop in Japanese exports prompted the euro to a fresh seven-week high of 125.17 yen but the pair was unable to sustain gains.
The euro was down 0.6 percent at 123.40 yen and the dollar was down 0.2 percent at 96.56 yen.
Meanwhile, the dollar was supported as a grim economic outlook remains intact. The dollar was up 0.6 percent against a basket of currencies at 87.294
The March Bund future was up slightly, having been in negative terriitory before the S&P comments. (Additional reporting by Balise Robinson and Natsuko Waki; editing by Stephen Nisbet) (To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Fund hBlog click on http://blogs.reuters.com/hedgehub)