* World stocks snap 3-day losing run, hover near 12-mth high
* Dollar recovers from earlier dips
* German Ifo business climate index rises
* UK economy contracts for record six straight quarters
By Dominic Lau
LONDON, Oct 23 (Reuters) - World stocks broke a three-day
losing run on Friday and hovered near their 12-month high,
boosted by the Dow's return above 10,000 points, while the
dollar briefly touched a new low for the year against the euro.
Solid earnings from several U.S. companies on Thursday
suggested corporate profitability has stabilised and the
recovery is gathering pace, lifting Wall Street <> <.SPX>.
The upbeat sentiment boosted crude and metal prices on
Friday and sent safe-haven government bond prices lower.
However, Britain's economy contracted unexpectedly in the
third quarter, squashing hopes of an end to the downturn and
instead making the current recession the longest on record.
[] The news sent sterling <GBP=D4> to a session low
against dollar.
World stocks measured in the MSCI All-Country Word Index
<.MIWD00000PUS> put on 0.3 percent at 298.17 points, with the
emerging market shares <.MSCIEF> rising 1 percent.
The global stock index has rallied 74 percent since hitting
a low in early March and is up 31 percent for the year.
In Europe, the FTSEurofirst 300 <> advanced 0.6
percent, paring gains after the UK growth data. Japan's Nikkei
average <> edged up 0.2 percent.
The UK GDP data "was very weak, but markets are more
earnings driven at the moment, so if Microsoft <MSFT.O> comes in
weaker than expected it will really hit sentiment," said Nick
Serff, Market analyst at City index, in London.
The dollar <.DXY> recovered from its fresh low for the year
against the euro after the market took aim at options barriers.
The Japanese yen <JPY=>, meanwhile, fell across the board as
a number of domestic issues, such as expectations of rising
government debt and revision of a privatisation scheme, gave
investors a reason to close long positions and resume yen sales.
The U.S. currency was up 0.5 percent to 91.74 yen, while the
euro was up 0.03 percent to $1.5024.
A snapshot of German business morale showed an increase in
optimism, although not quite as much as markets had expected.
Another survey showed euro zone services business grew at
its fastest pace in 20 months in October, quicker than expected,
while manufacturing activity expanded for the first time in over
a year. []
RISK PLAY
The VDAX-NEW volatility index <.V1XI> eased 3.4 percent to a
one-week low. The lower the index, the higher is investors'
appetite for risky assets.
In a further sign of the recovery, the world's biggest
building materials group Saint Gobain <SGOB.PA> kept its outlook
for a better second half of the year despite a slump in
third-quarter sales due to depressed construction activity.
The strong third quarter earnings also helped crude prices
<CLc1> tick higher, holding above $81 a barrel, while base metal
<MCU3=> were also in demand.
Yields on benchmark 10-year U.S. Treasuries <US10YT=RR> were
up 3 basis points at 3.453 percent, and those on the euro zone's
10-year benchmark Bund <EU10YT=RR> rose 1 basis points at 3.319
percent.
Results from Microsoft and Whirlpool <WHR.N> as well as U.S.
home sales data for September will provide investors further
evidence of the strength of the recovery in the world's largest
economy.
(Additional reporting by Blaise Robinson in Paris, Simon
Falush, Jamie McGeever and Swaha Pattanaik in London, and Kaori
Kaneko in Tokyo; Editing by Ruth Pitchford)
