* World stocks rise on solid economic view
* Euro lifted by expectations of hawkish ECB policy comments
By Jeremy Gaunt, European Investment Correspondent
LONDON, April 4 (Reuters) - Solid signs of growth in the
world economy supported global equities on Monday while
expectations of higher euro zone interest rates took the euro to
an 11-month high against Japan's yen.
Investors were generally upbeat about the global economy
following solid U.S. jobs data on Friday.
World stocks as measured by MSCI <.MIWD00000PUS> were up a
third of a percent, flirting with a month high and close to
gaining 5 percent for the year to date.
There were underpinned mainly by emerging stocks <.MSCIEF>,
up 0.6 percent. Japan's Nikkei <> closed up 0.1 percent.
European stocks opened lower but posted gains soon after,
adding to three-week highs hit on Friday.
The FTSEurofirst 300 <> index of top European shares
was up 0.1 percent after gaining 1.5 percent on Friday.
Corporate activity was in focus with shares in chemical
group Rhodia <RHA.PA> jumping after Belgium's Solvay <SOLB.BR>
launched a bid for its French rival.
Vodafone <VOD.L> rose after selling its 44 percent stake in
France's second biggest telecom operator SFR to Vivendi
<VIV.PA>.
But it is the improving macroeconomic backdrop that has been
primarily responsible for equities bouncing back from their
March tumble, related to Japan's disaster and civil unrest in
North Africa and the Middle East.
This growth improvement has led to expectations that the
European Central Bank will raise interest rates on Thursday and
that the U.S. Federal Reserve may be getting closer to
withdrawing liquidity. []
"As the economy turns the corner and gets back on its feet,
central bankers are beginning to see inflation as a greater
threat than lack of growth," said Jonathan Sudaria, dealer at
Capital Spreads.
RATES DRIVE EURO
Reflecting expectations of differing rate paths, the euro
hit fresh 11-month highs against a broadly weaker yen and
touched a five-month peak against the dollar.
In contrast to the ECB, the Bank of Japan is likely to
downgrade its economic assessment at its meeting on Wednesday
and may consider finding more ways to help the economy recover
from last month's massive earthquake and devastating tsunami.
The euro briefly popped above 120 yen <EURJPY=R> for the
first time since May 2010 and was later at 119.60 yen. It hit a
five-month high against the dollar of $1.4269 but was later at
$1.4235 <EUR=>.
"We expect the EUR to be supported this week in anticipation
of a hawkish press conference alongside a widely expected rate
hike," Barclays Capital said in a note.
"While we believe this will be sufficient to keep the
market's attention away from wider (euro zone) peripheral
concerns, they remain a risk."
There was little respite for the periphery's bond sector
with Fitch cutting Portugal's credit ratings by three notches to
BBB- late on Friday, one notch above junk, and signalling
further downgrades are likely.
Traders also said Spanish Prime Minister Jose Luis Rodriguez
Zapatero's decision not to seek a third term in 2012 elections
would raise questions over Madrid's future commitment to
economic reforms.
(Additional reporting by Kirsten Donovan, Ian Chua and
Masayuki Kitano; Editing by John Stonestreet)
