* MSCI world equity index backs off from 2009 highs
* Western govt debt fears knock U.S., euro zone bonds
* Moody's U.S. ratings affirmation boosts dollar
By Sebastian Tong
LONDON, May 28 (Reuters) - Global shares backed off from 2009 highs on Thursday, dragged down by investor concern over mounting Western government debt which overshadowed optimism voiced by U.S. President Barack Obama that the worst was over for the world's largest economy.
Fears over the spiralling debt taken on by the U.S. to revive economic demand against the backdrop of a record $1.75 trillion budget deficit fuelled a sell-off in U.S. government bonds, driving the yield on the benchmark 10-year Treasury note to a six-month high.
Euro zone government bonds also came under pressure, with June bund futures 39 ticks lower from Wednesday's settlement close at 118.99 by 0850 GMT.
Concern that rising yields would mean higher borrowing costs for businesses and consumers overwhelmed any encouragement that investors might have taken from comments from Obama that the U.S. economy was showing signs of stabilising and had "stepped back from the brink" after suffering its worst economic crisis in decades.
The MSCI world equity index slid 0.8 percent, off from the six-month high it hit on May 20, while the FTSEurofirst 300 index of pan-European blue-chip shares eased 1.4 percent.
"We have rallied in the last few months on a sense of optimism. Reality is setting in. The level of debt throughout the world especially in the U.S. and the UK are finally beginning to worry people," said Mark Priest, senior equities trader at ETX Capital.
Emerging stocks proved more resilient, clinging onto recent gains that have taken them to seven-month highs, while emerging market debt spreads widened 8 bps but hovered at October levels of 447 bps over Treasuries,
The dollar firmed against a basket of major currencies, after Moody's Investors Services on Wednesday affirmed its top "AAA" rating for the U.S. economy.
But the ratings agency also warned that the rating would come under pressure if Washington failed to reduce debt levels.
U.S. crude oil stayed near its six-month highs, peeking above $63 a barrel, helped by data from the American Petroleum Institute showing a larger-than-expected drawdown in crude stocks last week. (Additional reporting by Dominic Lau; Editing by Toby Chopra)