* MSCI world equity index up 0.5 pct at 270.13
* Yen briefly hits 7-week high vs dollar
* Euro firmer after ECB leaves rates on hold
By Natsuko Waki
LONDON, Sept 3 (Reuters) - World stocks and oil prices rose
on Thursday, bolstered by firmer Chinese shares, while the euro
held firm after the European Central Bank left interest rates at
record lows as expected.
The yen briefly hit a seven-week high against the dollar as
investors grew cautious ahead of Friday's closely-watched U.S.
jobs report.
The ECB left interest rates steady at 1 percent for a fourth
month running. At his news conference, President Jean-Claude
Trichet is likely to preach caution about a speedy rebound from
recession even as a survey showed the euro zone services economy
jumped back almost to expansion in August. []
And the ECB will produce new economic forecasts likely to
portray a rosier view of the economy.
"There's no doubt that the forecast is going to be revised
higher, it's just a matter of how much," said Stephen Koukoulas,
global strategist at TD Securities in London.
"A confirmation of this will be something that the market
will take with a degree of optimism, which could result in a
mildly bullish tone for the euro."
For stocks, the MSCI world equity index <.MIWD00000PUS> was
up 0.5 percent while the FTSEurofirst 300 index <> rose
0.7 percent.
U.S. stock futures rose 0.8 percent <SPc1>, pointing to a
firmer open on Wall Street later. Chinese shares <> closed
4.8 percent higher.
U.S. crude oil <CLc1> rose 1.7 percent to $69.21 a barrel.
Markit's Euro zone final services Purchasing Managers Index
rose to 49.9 in August from 45.7 in July, just shy of the 50.0
mark that divides growth from contraction.
Group of 20 finance chiefs meeting in London for a two-day
meeting are set to tentatively discuss exit strategies -- plans
to wind down trillions of dollars of fiscal and monetary
stimulus measures.
However, some policymakers are keen to stress their
commitment to keep stimulus in place until the recovery becomes
self-sustainable, which would be supportive of risky assets.
"(The G20 meeting) is likely to show tension between
countries, with some wanting to prepare exit strategies and
others warning that an early exit, especially from expansionary
monetary policy measures, could lead to a double dip," BNP
Paribas said in a note to clients.
SHANGHAI CORRELATION
Emerging stocks <.MSCIEF> rose 1.1 percent.
Shanghai stocks <> climbed after China's top regulator
assured investors that the country's market was healthy,
sparking hopes of government policy support.
Chinese stocks have been increasingly correlated with other
share markets.
According to Brown Brothers Harriman, the correlation
between the Shanghai index and the S&P 500 index has shot up in
the last three months and is now more than three times more
closely correlated than over the past two years.
The correlation between the euro/dollar exchange rate and
the Shanghai index is now at its highest since the second
quarter of 2007.
The highest over the past decade was recorded in August 2005
with a correlation of about 40 percent.
The yen rose as high as 91.95 per dollar <JPY=> before
falling back to 92.32. The dollar <.DXY> fell 0.4 percent
against a basket of major currencies. The euro was up half a
percent to $1.4340 <EUR=>.
The September Bund future <FGBLc1> fell 27 ticks.
(Additional reporting by Simon Falush, editing by Mike Peacock)
