* MSCI world equity index up 1.4 percent at 214.10
* Bank of America bailout, U.S. fiscal packages boost morale
* Yen, government bonds slip; oil firmer
By Natsuko Waki
LONDON, Jan 16 (Reuters) - World stocks rose from the previous day's one-month low on Friday while government bonds and the yen slipped after Washington rescued Bank of America and Congress advanced emergency economic aid plans.
Bank of America will receive another $20 billion in U.S. government cash and a guarantee against almost $100 billion of potential losses on toxic assets after its acquisition of Merrill Lynch.
The U.S. Congress also advanced legislation to provide nearly $1.2 trillion in emergency spending to fight the worsening economic recession triggered by the global lending crisis.
"The rescue package for Bank of America will give a fillip," said Bernard McAlinden, strategist at NCB Stockbrokers in Dublin. MSCI world equity index rose 1.4 percent, after falling to a one-month low on Thursday. The FTSEurofirst 300 index of leading European shares rose 2.2 percent.
Despite the rise on Friday, the index is on course for its biggest weekly fall since late November.
Emerging stocks rose 1.8 percent.
U.S. crude oil rose 1 percent to $35.74 a barrel.
In the European government bond market, March German bund futures fell 52 ticks.
The low-yielding yen, which tends to outperform in times of risk aversion, weakened 0.7 percent to 90.45 per dollar.
The dollar fell 0.5 percent against a basket of major currencies.
The euro gained 0.8 percent to $1.3230 having hit a five-week low of $1.3025 on Thursday after the European Central Bank cut interest rates to 2 percent.
The cost of protecting Ireland's debt against default rose sharply after Ireland nationalised Anglo-Irish Bank.
Five-year credit default swaps on Ireland's sovereign debt were quoted by traders as high as 250 basis points from 184 bps on Monday, meaning it costs 250,000 euros to protect 10 million euros of debt.
"At worst it's going to lead to fresh worries about how the Irish economy survives this crisis and how they can service their increasing debt burden," Deutsche Bank credit strategist Jim Reid said in a research note.
(Additional reporting by Brian Gorman and Natalie Harrison; Editing by Ruth Pitchford)