* Global stocks steady after Asia gains
* European stocks down 1 percent
* Investors cautious ahead of HSBC report
* Dollar slightly higher
By Jeremy Gaunt, European Investment Correspondent
LONDON, May 11 (Reuters) - Global shares held steady on
Monday, working on their third consecutive month of gains, but
there were losses in Europe after recent gains amid worries
about bank earnings.
Investors were generally lifted by last week's
smaller-than-expected number of job losses in the United States,
which reinforced expectations that the global economy, while
still weak, may have hit bottom.
Increased optimism about the global financial system is also
feeding a broad rally.
MSCI's all-country world stock index <.MIWD00000PUS> edged
up 0.2 percent, having gained 6 percent so far this year. This
came after Asian shares rose to their highest level in seven
months.
But European started the week on a down note, with some
concerns about upcoming results from banking giant HSBC
<HSBA.L>.
The FTSEurofirst 300 <> index of top European shares
was down 1.0 percent after ending 1.7 percent higher at a
four-month closing high on Friday.
The index has gained about 33 percent since hitting a record
low in early March.
"We have good chances for a further positive development but
the big picture still sounds a note of caution," said Roger
Peeters, strategist at Close Brothers Seydler.
As well as signs of improvement in the world economy, U.S.
company results have generally been positive.
Thomson Reuters research shows that of the 424 S&P 500
<.SPX> companies that have reported Q1 2009 earnings to date, 65
percent have reported earnings above analyst expectations and 28
percent below forecasts.
In aggregate, companies in the S&P 500 are reporting
earnings that are 6.0 percent above estimates, which is well
above the -9.5 percent average over the past eight quarters, it
said in a weekly note.
HIGHER DOLLAR
The dollar inched higher on Monday, after earlier hitting
its lowest in seven weeks against the euro.
Emboldened earlier by slowing U.S. job losses on Friday,
investors in Asia diversified into other currencies, pushing the
dollar index <.DXY> to a fresh four-month low on hopes the worst
of the economic slump may be over.
But concerns about HSBC took the shine off the positive
sentiment and supported the dollar.
"We had a big squeeze up during Friday and into this
morning, especially in terms of euro/dollar which went up
towards the $1.37 resistance," said Rabobank strategist Jeremy
Stretch.
"But while we have seen some caution this morning that's
capped the dollar's slide, the direction in the short-term is
still going to be determined by equity markets sentiment and
global recovery prospects."
The euro hit a seven-week high at $1.3670 on trading
platform EBS at one point but later reversed course to stand at
$1.3607 <EUR=>, 0.3 percent down from late U.S. trade on Friday.
Euro zone government bonds rose as European shares fell.
The two-year Schatz yield <EU2YT=RR> was down 4 basis points
at 1.286 percent, while the 10-year Bund yield <EU10YT=RR> was
down 4 basis points at 3.418 percent.
(Additional reporting by Christoph Steitz and Kirsten Donovan,
editing by Mike Peacock)
