* World stocks gain on Bernanke comments, M&A
* Wall Street likely to open up
* Dollar slips as BOJ move limited
By Jeremy Gaunt, European Investment Correspondent
LONDON, Aug 30 (Reuters) - World stocks put in modest gains
and the dollar slipped on Monday, lifted by last week's
assurance from the U.S. Federal Reserve that it will do what is
needed to spur economic recovery.
Early indications were that Wall Street would also start on
an up note.
Mergers and acquisitions continued to buoy European shares.
Japanese stocks closed up nearly 1.8 percent, but only after
paring earlier strong gains when the Bank of Japan made only
minor tweaks in policy, disappointing markets looking for more
aggressive action against deflation.
The yen rose after the decision as expectation of imminent
market intervention to weaken the currency faded.
MSCI's all-country world stock index <.MIWD00000PUS> and the
Thomson Reuters global stock index <.TRXFLDGLPU> both gained
around 0.4 percent. MSCI's emerging market sub-index <.MSCIEF>
was up 0.8 percent.
A major catalyst was Fed Chairman Ben Bernanke's playing
down of the likelihood that the slowing U.S. economy might slip
back into recession.
"(It) was reassuring, but predictably so. There was no big
positive surprise," said Bernard McAlinden, investment
strategist at NCB Stockbrokers in Dublin.
"As long as the economy stays out of recession, and we have
some growth, the markets won't be too worried. The consensus is
there won't be a double dip."
Trading in Europe was thinned by a holiday in Britain, but
the FTSEurofirst 300 <> was up 0.4 percent.
News of mergers and acquisitions has been a factor in
generally buoying stock markets in recent days.
On Monday, the buzz was around French aerospace parts maker
Zodiac Aerospace <ZODC.PA> reportedly launching an offer for
French conglomerate Safran <SAF.PA>. South Korean group POSCO
<005490.KS> said it was considering a takeover of Elkem, a maker
of silicon for solar panels, and a unit of Norway's Orkla.
French drugmaker Sanofi-Aventis <SASY.PA> also publicly
disclosed its $18.5 billion cash offer for U.S. biotechnology
company Genzyme Corp <GENZ.O>.
M&A activity in August had reached $228 billion by Friday,
not far from the $260 billion record for the month hit in 2006,
before the financial crisis.
BOJ SHUNS AGGRESSION
The yen rose against the dollar after the Bank of Japan
failed to signal aggressive measures to curb yen strength at an
emergency meeting, choosing only to expanded a fixed-rate fund
supply scheme.
The central bank's moves were seen by investors as a
symbolic gesture that will do little to halt the currency's
climb which is hurting exports and may prolong deflation.
[]
"People are once again putting on short dollar/yen positions,
having reduced their long exposure ahead of the meeting," said
Niels Christensen, currency strategist at Nordea in Copenhagen.
The dollar was down 0.5 percent against the yen <JPY=> at
84.78 yen, close to a session low of around 84.73 yen.
The dollar was also down 0.1 percent against a basket of
currencies <.DXY>.
German government bonds resumed their climb following a
steep fall late last week but held well below record highs
struck recently with a public holiday in Britain dampening
trading activity.
(Additional reporting by Brian Gorman and Jessica Mortimer;
Editing by Toby Chopra)
