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GLOBAL MARKETS-Stocks up, oil at 2009 high on recovery hopes

Published 05/27/2009, 07:17 AM
Updated 05/27/2009, 07:24 AM
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* MSCI world equity index up 0.6 percent at 244.09

* Oil hits 2009 peak above $63/bbl

* Yen, government bonds fall

By Natsuko Waki

LONDON, May 27 (Reuters) - World stocks rose and oil prices hit a 2009 high on Wednesday, while the yen fell after improving consumer confidence in the United States and Europe boosted expectations the global economy is starting to recover.

Wall Street rallied on Tuesday after data showed U.S. consumer confidence posted its biggest monthly jump in six years.

Figures on Wednesday showed Japanese exports rose for a second month in April while consumer morale in France and Sweden improved.

Economic data, action by central banks around the world to inject liquidity and massive government stimulus packages are boosting expectations that the global economy is gradually coming out from its worst downturn since the 1930s.

U.S. existing home sales data at 1500 GMT will provide the next focus on that front.

"Any signs of stabilisation in the housing market will be seen very positively by investors," Christian Jimenez, president of Imene Investment partners in Paris, said.

"But overall, the rally remains fragile, and we could see a selloff when people realise how damaging for the U.S. economy is GM's bankruptcy, and when financial institutions start to unveil losses from credit card operations, which could become the next big writedown wave."

General Motors Corp has failed to persuade enough bondholders to accept a debt-for-equity swap, setting the stage for the largest-ever U.S. industrial bankruptcy within days. The MSCI world equity index rose half a percent, edging towards a six-month peak set last week.

The FTSEurofirst 300 index rose 0.6 percent, led by banking shares, including Societe Generale, HSBC and Barclays.

Other analysts say a push towards new high for world stocks requires more economic data to improve and back up optimism for a recovering economy.

"We believe it is important to remember that less bad economic news is not the same as actual good news," said Bob Doll, vice chairman and global chief investment officer of equities at BlackRock, in a note to clients.

"As such, we believe the rally that started in early March may have run out of steam and that a resumption of the rally will require more solid evidence of an economic recovery."

Emerging stocks rose 2.1 percent.

U.S. crude oil rose as high as $63.18 a barrel, its highest since November, as signs of an economic recovery boosted expectations oil demand would rebound. Oil prices are now almost double the four-year low of around $33 hit in December.

The June Bund future fell 38 ticks.

The low-yielding yen fell a third percent to 95.32 per dollar while it hit a six-month low of 152.85 per sterling.

The dollar rose 0.1 percent against a basket of major currencies, having hit a 4-1/2 month low last week. (Additional reporting by Blaise Robinson, editing by Mike Peacock)

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