* World stocks up 0.3 percent <.MIWD00000PUS>
* Fed meeting eyed; seen pausing on rates, new initiatives
* U.S. housing data lifts stock market sentiment
* BOJ raises spending on government bonds by a third
By Veronica Brown
LONDON, March 18 (Reuters) - World share prices rose on
Wednesday, while European government debt fell with
forecast-beating U.S. housing data prompting more optimism among
investors after the last week's rally.
The stress that has scrambled markets for so long remained
on radars, though, as a rare positive U.S. housing figure had no
impact on European credit markets, allowing indexes to widen,
while sterling dropped after Britain's unemployment rate spiked.
U.S. Treasury prices firmed slightly, while the dollar also
rose a touch <.DXY> as attention turned to the Federal Reserve's
policy outcome later in the day, and speculation over whether it
will purchase government debt to keep interest rates low.
World stocks, as measured by MSCI's all country index rose
0.3 percent to 195.59 <.MIWD00000PUS>.
European financials gained, with UniCredit <CRDI.MI> up 7.4
percent early, after the company posted a 38 percent fall in
2008 net profit on Wednesday, ahead of analysts' forecasts
[].
A lot of the impetus came after figures on Tuesday showing a
22.2 percent surge in U.S. housing starts in February.
[]
But analysts were sanguine on the recent purple patch for
stocks, wary of several false starts ahead of further economic
bad news.
"This is a correction but we're not going to go up every
day, one swallow does not make a summer," said Howard Wheeldon,
strategist at BGC markets.
That sense of caution was mirrored in European credit
markets.
The Markit iTraxx Crossover index <ITEXO5Y=GF>, made up of
50 mostly "junk"-rated credits, was at 1138 basis points at 0929
GMT, according to data from Markit, 33 basis points wider versus
late on Tuesday.
The investment-grade Markit iTraxx Europe index <ITEEU5Y=GF>
was at 191.25 basis points, 3.25 basis points wider.
FED WATCH
Leading central banks are taking or contemplating a range of
unconventional measures to maintain borrowing costs at an
ultra-low level as they bid to drag economies out of a deep
global downturn.
The Swiss National Bank has combined a rate cut with FX and
bond market intervention, the Bank of England has started
purchasing government debt with freshly created money, while the
Bank of Japan has just sharply increased the level of debt it
will buy to support the economy.
But the Fed is probably going to hold fire on plans to buy
long-dated debt, analysts say, hoping that stimulus packages
implemented so far will kick in soon.
"Expectations (that the Fed will announce a move towards
buying U.S. government debt) have increased after the BoJ
decision, but I think they may be disappointed," said Antje
Prafcke at Commerzbank in Frankfurt.
The BOJ said overnight it was holding interest rates steady
at 0.1 percent and increasing its outright buying of Japanese
government bonds to 1.8 trillion yen ($18.28 billion) per month
from 1.4 trillion yen [].
On currency markets, the dollar was up a quarter percent
against a basket of major currencies <.DXY>, while sterling
dived to a 7-week low against the euro at 93.96 pence <EURGBP=>
after data showing Britain's jobless rose above 2 million.
[]
(Additional reporting by Simon Falush and Jane Baird in
London Editing by Patrick Graham)
