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GLOBAL MARKETS-World stocks hit 9-month peak; euro rallies

Published 07/27/2009, 07:11 AM
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* MSCI world equity index up 0.7 percent at 263.38

* World stocks at 9-mth peak; emerging stocks at 10-mth high

* Oil, euro rally; dollar, government bonds fall

By Natsuko Waki

LONDON, July 27 (Reuters) - World stocks rose to 9-month highs and the euro hit a 7-week high versus the dollar on Monday as a recent run of strong corporate earnings and anticipation of more boosted optimism for a global economic recovery.

Tokyo's stock market posted its longest winning streak in 21 years while emerging Asian stocks hit a 10-month high. U.S. stock futures pointed to a higher open on Wall Street later following strong gains in most indexes on Friday.

This week's results include Exxon Mobil, Honda Motor, Motorola, Deutsche Bank and BP.

"Risk appetite (is) quite healthy, there is lower volatility in stock markets... which continue to register gains," said Patrick Jacq, euro zone interest rate strategist at BNP Paribas in Paris.

"If these earnings are in line or above expectations we can see risk appetite continue to be in the driving seat." MSCI world equity index rose 0.7 percent, hitting levels not seen since October, adding to gains over 4 percent last week.

Since March 8, the index has had 16 weeks of gains versus just four of losses.

The FTSEurofirst 300 index rose 0.6 percent to a fresh 8-1/2 month peak with media and utilities shares leading the rally. S&P futures were up 0.4 percent.

Emerging stocks rose 1.4 percent to hit a fresh 10-month high.

According to Thomson Reuters data, the second-quarter earnings growth rate for the U.S. benchmark S&P 500 index improved to -31.0 percent last week from -35.2 percent in the previous week, thanks in part to better-than-expected earnings from financial sector firms.

Of the 184 companies in the S&P 500 index that have reported earnings to date for the second quarter, 77 percent have beaten expectations.

The materials, energy, industrial sectors are anticipating the lowest earnings growth rates for the quarter.

This week, a further 146 S&P 500 companies are due to announce earnings results.

U.S. crude oil rose 0.6 percent to $68.50 a barrel.

The September bund futures fell 24 ticks as investors sought riskier instruments over safe-haven government bonds.

The euro rose as high as $1.4298 while the dollar fell 0.3 percent against a basket of major currencies. Against the low-yielding yen it rose 0.4 percent to 95.14 per dollar.

A weaker dollar helped push gold to a 6-1/2 week high of $958 an ounce.

"Investors are overall still optimistic for global growth, so the dollar and yen should remain on the back foot," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.

Investors are awaiting the outcome of a two-day meeting of top U.S. and Chinese officials in Washington, which started on Monday, on a broad range of economic, security, diplomatic, energy and environmental issues.

The United States, which ran a record $266 billion trade deficit with China in 2008, is seeking ways to rebalance trade, including persuading the Chinese to liberalise exchange rates so that the yuan appreciates to trim Chinese exports and boost imports. (Additional reporting by Tamawa Desai; Editing by Toby Chopra)

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