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GLOBAL MARKETS-Stocks firmer after Bernanke; yen weakens

Published 02/25/2009, 04:31 AM
Updated 02/25/2009, 04:32 AM
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* MSCI world equity index up almost 1 percent at 192.92

* Bernanke remarks sooth investor fears over nationalisation

* Yen hits 3-month low vs dollar as safe haven status wanes

By Natsuko Waki

LONDON, Feb 25 (Reuters) - World stocks rose on Wednesday from the previous day's six-year lows after Federal Reserve chairman Ben Bernanke signalled nationalisation of big banks was not at hand, while the yen fell across the board.

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.

However, Bernanke said on Tuesday the significant value built up in the country's banks would be lost if they were government-owned and though there could be a time when it became necessary to close banks down, now is not the time.

U.S. stocks rose more than three percent on Tuesday.

"It's all about the equity rally we had last night and the U.S. shying away from nationalising the banks," said David Keeble, rate strategist at Calyon. MSCI world equity index rose 1 percent while the FTSEurofirst 300 index gained 1.5 percent.

Emerging stocks rose 1 percent. Oil rose 0.2 percent to $40.03 a barrel.

WANING STATUS

The yen fell as low as 97.33 per dollar, levels last seen in November. The Japanese currency also hit its weakest levels in almost seven weeks of 125.17 per euro.

A rapidly deteriorating domestic economy and political uncertainty has been hitting the low-yielding yen's safe haven appeal, wiping out the inverse correlation between equities and the Japanese currency.

Wednesday's data showed exports plunged a record 45.7 percent in January from a year earlier, with record slides in shipments to the United States, Europe and the rest of Asia pointing to a deepening recession across much of the world.

"The fundamental case for a weaker yen has become more pressing with Japan reporting its fourth monthly trade deficit in a row, suggesting that the current account surplus will melt down further, reducing commercial yen buying needs," BNP Paribas said in a note to clients.

The March bund future fell 20 ticks.

The dollar was steady against a basket of major currencies.

(Additional reporting by Kirsten Donovan; Editing by Ruth Pitchford)

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