* World shares rally on earnings, CIT news
* Asia ex-Japan shares at 2009 high
* Europe shares rise 1.5 percent, Wall Street set for gains
* Dollar at six-week low against major currencies
By Jeremy Gaunt, European Investment Correspondent
LONDON, July 20 (Reuters) - World stocks built on last
week's rally on Monday, climbing strongly on
better-than-expected corporate earnings results and a
last-minute rescue package for troubled U.S. lender CIT.
Asian shares outside Japan hit a 2009 high. European shares
were up 1.5 percent. Wall Street looked set to join in.
Foreign exchange traders moved into riskier currencies,
sapping yen strength and taking the dollar to a six-week low
against a basket of major currencies <.DXY>.
Government bonds sold off, showing investors were prepared
to take on more risk, and oil rose above $64 a barrel.
MSCI's all-country world stock index <.MIWD00000PUS> was up
0.9 percent, adding to a 6.6 percent gain last week. Its
emerging market counterpart <.MSCIEF> gained 2.4 percent.
The catalyst for the recent rally in stocks has been a
series of better-than-expected corporate earnings reports,
notably from IBM <IBM.N>, Goldman Sachs <GS.N> and Intel
<INTC.O>.
Sentiment was also helped by news CIT Group Inc <CIT.N> had
clinched a last-minute $3 billion rescue by a group of
bondholders and probably escaped bankruptcy. CIT lends to nearly
one million small and mid-sized U.S. businesses. []
"With some big numbers this week, we will be hoping to see
some better numbers which in turn could help us add yet more to
this rally as earnings boost the good feeling surrounding the
economic recovery," said Nick Mitchell, a dealer at CMC Markets.
The pan-European FTSEurofirst 300 <> index of top
shares was up 1 percent, taking it up around 35 percent since
hitting its lifetime low of March 9.
Japanese markets were closed for a holiday.
DOLLAR DIVES
The dollar fell to a six-week low against a basket of
currencies, dropping as low as 78.799, its lowest level since
early June.
The euro also hit a six-week high against the dollar at
$1.4248 <EUR=>
The U.S. currency has been falling recently when market
sentiment becomes bullish about recovery, raising appetite for
riskier, high-yielding currencies.
"The earnings and data from the housing sector suggest the
U.S. economy is showing signs of a recovery although investors
are still reluctant to pour capital into it," said Richard
Grace, senior currency strategist at Commonwealth Bank of
Australia, Sydney.
Euro zone government bond yields rose, with the interest
rate-sensitive two-year Schatz yield <EU2YT=RR> at 1.327
percent, up 5 basis points
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(Editing by Stephen Nisbet)
