* Dollar hits 3-month low against currency basket
* U.S. data, Fed Beige Book, California fiscal woes hurt
* World stocks rise, boosted by European company earnings
* Euro hits 11-wk high vs dlr; sterling scales 5-month peak
By Dominic Lau
LONDON, July 29 (Reuters) - Robust quarterly earnings from
Europe drove world stocks higher on Thursday, while the dollar
hit a three-month low on the back of weak U.S. data and a
downbeat assessment of the economy from the Federal Reserve.
Investors took heart from results for companies including
Royal Dutch Shell <RDSa.L>, Rolls Royce <RR.L> and BAE Systems
<BAES.L>, while there were gains for French service group
Capgemini <CAPP.PA> and France Telecom <FTE.PA>, Europe's
third-largest telecom operator by market cap.
Global equities measured by MSCI All-Country World Index
<.MIWD00000PUS> added 0.3 percent, and the Thomson Reuters
global stock index <.TRXFLDGLPU> put on 0.4 percent.
"Second-quarter results are better than expected and it
supports the market, but the rise is capped by the rather poor
macro data," said Emmanuel Morano, head of equity management at
fund management firm UFG-LFP in Paris.
"The big question is: Is this a pause in the economic
recovery or are we heading for a brutal landing? The bond market
seems to be pricing in the pessimistic scenario, while equities
send a more optimistic signal. Who's wrong? Tomorrow's U.S. GDP
figure should shed light on this."
The pan-European FTSEurofirst 300 <> advanced 0.5
percent, also helped by improving euro zone economic sentiment,
which rose to a 28-month high []. Tokyo's Nikkei
average <>, however, fell 0.6 percent after hitting a
two-week closing high the previous session.
UBS raised European shares to "neutral" from "underweight",
citing "compelling valuations" as one of the reasons.
MSCI Europe <> carried a one-year forward
price-to-earnings -- a gauge of valuations -- of 10.27, cheaper
than the S&P 500 <.SPX>, MSCI emerging benchmark <.MSCIEF> and
MSCI Japan <.MIJP00000PJP>, according to Thomson Reuters
DataStream.
The one-year forward P/E for the S&P 500 stood at 11.92, and
10.5 for MSCI emerging market index and 13.87 for MSCI Japan.
U.S. stock index futures <SPc1> <DJc1> <NDc1> rose 0.4 to
0.5 percent, indicating a firmer start for Wall Street.
U.S. WEAKNESS
Wednesday's weak U.S. durable goods figures, however, added
to concerns about the outlook for the world's largest economy.
The Fed's Beige Book, a summary of national economic
conditions, also showed activity was not as robust in a few
districts and had lost steam in recent weeks.
California's declaration of a state of emergency over its
finances [] also hurt the dollar, which fell 0.7
percent against a basket of currencies <.DXY> and hit a
three-month low.
The euro <EUR=> rose 0.7 percent to $1.3072, reaching an
11-week high, and sterling <GBP=> touched a five-month peak in
European trade at $1.5656. By midday in London it stood at
$1.5632, still up 0.3 percent on the day.
"U.S. economic data is unequivocally weak, yet concern over
Europe's ability to execute necessary fiscal austerity together
with its associated negative economic impact can combine to see
the euro again emerge as an underperformer," Chris Turner, head
of FX strategy at ING in London, said in a note.
Yields on 10-year benchmark Bunds <DE10YT=RR> rose 1 basis
point to 2.737 percent, while those on 10-year U.S. Treasuries
<US10YT=RR> steadied at 2.9993 percent.
(Additional reporting by Blaise Robinson, Naomi Tajitsu and
Will James; Editing by Hugh Lawson)
