* MSCI world equity index down 0.23 percent at 240.71
* Fed's cautious outlook weighs on shares; oil weaker
* Euro, dollar LIBOR rates hit fresh record lows
By Natsuko Waki
LONDON, June 25 (Reuters) - World stocks slipped on Thursday after the Federal Reserve cautioned that the U.S. economy would remain weak for a time, adding to concerns about the sustainability of a recent recovery.
The interbank cost of borrowing three-month euros fell by the most since Jan. 26 to mark a fresh record low, a day after the European Central Bank's huge liquidity boost. Equivalent dollar rates fell to a historic low after the Fed kept its near zero interest rate policy unchanged.
The U.S. central bank signalled it was less concerned about deflation, but it also said inflation would remain subdued for some time and interest rates would stay low for an extended period.
"The economy is in a bad state and we are working through a rubble," said Michala Marcussen, head of strategy and economic research at Societe Generale Asset Management.
"We are in a choppy and volatile markets. We have corrected the excessive passion but the catalyst for strong growth is not there yet." MSCI world equity index fell 0.4 percent. After hitting a 7-1/2 month high earlier this month, the benchmark index has been on a slight downward path, staying around five percent off the peak. On the year, the index is up around 5.8 percent, while on the quarter it is on track for the biggest gain since the fourth quarter of 1998.
"We might move sideways during the summer, but appetite for equities from institutional investors is definitely rising and they could seriously start buying in the fall," said David Thebault, head of quantitative sales trading at Global Equities in Paris.
The FTSEurofirst 300 index fell 1.3 percent, with chemical and basic resource shares being the biggest losers. Emerging stocks rose 0.6 percent.
Investors are looking to a series of second-quarter corporate results due over the next few weeks to seek concrete evidence of an economic turnaround.
According to Thomson Reuters data, quarterly earnings are estimated to drop 34.5 percent for the S&P 500 index for the second quarter -- downgraded from 27 percent growth in July 2008 -- and fall by 21.4 percent in the third quarter.
In the fourth quarter, however, the earnings growth rate is expected to hit a whopping 180.2 percent -- thanks to some optimism about firms selling discretionary consumer goods and material firms.
MIXED WORD
The Fed's mixed word on the economy weighed on the Dow Jones industrial average on Wednesday while some technology shares were firmer, thanks to stronger-than-expected quarterly results from software maker Oracle.
U.S. stock futures were largely steady, pointing to a steady open on Wall Street.
The dollar rose 0.7 percent to 96.41 yen while it was steady against the euro at $1.3936. The U.S. currency rose 0.2 percent against a basket of major currencies.
Overnight euro Libor dipped by almost one full point to 0.34625 percent from 1.27500 percent as funds from the ECB's one-year auction started flowing into the system. The central said it would lend banks 442.24 billion euros, boosting liquidity and driving money markets rates lower.
Equivalent dollar rates fell to 0.60125 percent.
U.S. crude oil rose 0.7 percent to $69.14 a barrel.
The September bund futures were up 5 ticks. U.S. Treasury prices were under pressure earlier after the Fed kept to its $300 billion debt buyback programme. The benchmark 10-year yield was steady at 3.6950 percent. (Editing by Andy Bruce)