* MSCI world equity index at 9-month high
* Bernanke to testify
* Dollar stabilises after fall; oil rises
By Natsuko Waki
LONDON, July 21 (Reuters) - World stocks hit a 9-month high on Tuesday and emerging market debt spreads with U.S. Treasuries were the narrowest in 10 months as investors anticipated upward surprises from earnings results.
Wall Street looked set for a positive start a day after the S&P 500 index hit an eight-month closing high after troubled lender CIT reached a deal with bondholders for $3 billion in emergency financing, according to a source familiar with the situation.
Ahead of twice-yearly testimony to Congress later in the day, Federal Reserve Chairman Ben Bernanke offered reassurance that loose monetary policy with near-zero interest rates would be around for a while longer in an article in the Wall Street Journal.
With general improvement in risk appetite, investors are looking to more corporate earnings results from firms. Coca-Cola Co reported a better-than-expected quarterly profit, the latest in a series of positive surprises.
Dupont posted a 61 percent drop in quarterly profit, hurt by weak global demand, but cost cuts helped the chemical maker beat Wall Street forecasts.
"The general sense as results season is upon us is that there will be fewer negative surprises than in 2008... it will be comfortable which is helping increase risk appetite," said Jeremy Batstone Carr, equity strategist at Charles Stanley. MSCI world equity index rose 0.4 percent, approaching the high set last month, which was a level last seen in October.
The FTSEurofirst 300 index rose 0.7 percent, slipping past a June 11 high to stand at its highest since October last year.
Emerging sovereign debt spreads narrowed to touch 400 basis points over U.S. Treasuries for the first time in 10 months before widening to 401 bps, 4 bps tighter from the previous close.
Emerging shares were also hovering at 10-month highs, a level they reached on Monday.
"We've had better earnings, better economic data and risk appetite is up -- this is the story driving the market at the moment," said James Hughes, analyst at CMC Markets.
According to Thomson Reuters data, the second-quarter earnings growth rate for the S&P 500 improved to -35.2 percent as of end last week from -35.7 percent, thanks largely to better-than-expected earnings from companies in the financial sector.
However, all sectors in the S&P 500 are expecting a year-over-year decline in earnings with the materials, energy, financials and industrials anticipating the lowest earnings growth rates for the quarter.
U.S. crude oil rose 86 cents to $64.847 a barrel.
The dollar was at a seven-week low against a basket of major currencies while the euro fell 0.3 percent to $1.4221 after hitting a six-week high on Monday.
Bernanke will start his twice-yearly testimony on the economic outlook and monetary policy before the House Financial Services Committee at 1400 GMT. Analysts say Bernanke was likely to make clear again that there is no rush to tighten.
"Whilst there are obvious signs that the economic data is improving or at least showing signs of bottoming out, recent rhetoric from the Fed has remained dovish," Calyon said in a note to clients.
"Bernanke should reiterate that the slack in the economy will keep the inflation outlook subdued." (Additional reporting by Simon Falush and Jessica Mortimer; editing by Stephen Nisbet)