* MSCI world equity index up 0.2 pct at 342.42
* China trade data boosting risk appetite; inflation eyed
* Euro hits 3-week low; oil steadies
By Natsuko Waki
LONDON, Feb 14 (Reuters) - World stocks inched towards last
week's 30-month high on Monday as China's shrinking trade
surplus underscored its robust domestic demand and talk of
slower-than-expected inflation eased policy tightening concerns.
China's trade surplus fell to its lowest in nine months in
January when imports surged, highlighting China's massive
appetite for raw materials. Solid export growth also hinted at
solidifying recoveries in the U.S. and European economies.
Traders said that China's consumer prices may have risen as
little as 4.9 percent in the year to January, the lowest of 26
forecasts in a Reuters poll which gave a median prediction of a
5.3 percent rise. The official data will be announced on
Tuesday. <ECONCN> []
This eased concerns that China's central bank would have to
raise interest rates aggressively.
"The talk of the Chinese inflation data and the export and
import data is going to boost the market," Heino Ruland,
strategist at Ruland Research in Frankfurt said.
"Inflation has been the major worry and there has been a
fear of monetary overkill, but until the data is released (on
Tuesday) we could see a bit of volatility in the market."
The MSCI world equity index <.MIWD00000PUS> rose 0.2
percent, having hit its highest level since August 2008 last
week.
Thomson Reuters' global stock index <.TRXFLDGLPU> gained 0.3
percent. U.S. stock futures were down around 0.1 percent <SPc1>,
pointing to a weaker open on Wall Street.
The FTSEurofirst 300 index <> rose 0.2 percent to hit
a 29-month peak.
Emerging stocks <.MSCIEF> added 1.1 percent. Shanghai stocks
<> hit an eight-week high, scoring the index's biggest
single-day percentage gain since mid-December.
U.S. crude oil <CLc1> erased early losses to stand steady at
$85.53 a barrel after hitting a 10-week low last week.
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China's trade surplus http://link.reuters.com/weh97r
GDP of G3 economies http://link.reuters.com/dac97r
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YIELD SUPPORT FOR DOLLAR
The euro <EUR=> fell to a three-week low of $1.3450 on
concerns surrounding the fate of German lender WestLB.
Sources told Reuters German financial regulator BaFin is
being involved in the WestLB restructuring talks as the bank
struggles to come up with a rescue deal. []
"The WestLB news doesn't provide a great deal of optimism to
the euro at the start of the week," said Jeremy Stretch,
currency strategist at CIBC.
"Structural negatives in the euro zone haven't gone away,
and some of those risks are due to the banking sector. WestLB's
problems are a reflection of that."
The dollar <.DXY> rose 0.2 percent against a basket of major
currencies.
There was no immediate reaction from President Barack
Obama's budget proposal to cut the U.S. deficit by $1.1 trillion
over 10 years [].
The dollar has been supported by rising U.S. yields, which
hit their highest in nearly 10 months last week. <US10YT=RR>
"As long as U.S. yields hold current high levels it is hard
to oppose dollar gains," Lloyds TSB said in a note to clients.
"But it is questionable how sustainable the current level of
U.S. yields is with a dovish (Federal Reserve) stance, and the
dollar typically struggles to find much traction in a 'risk on'
world."
German government bond futures <FGBLc1> were steady on the
day.
European finance ministers will discuss on Monday how to
give their euro zone rescue fund more flexibility and firepower
and how to tackle debt crises after 2013, but final decisions
are unlikely before March. []
(Additional reporting by Joanne Frearson; Editing by Ruth
Pitchford)
