* Global shares rise on solid economic view, M&A
* Wall Street to open higher
* Euro slips back after hitting multi-month highs
By Jeremy Gaunt, European Investment Correspondent
LONDON, April 4 (Reuters) - Solid signs of growth in the
world economy and prospects for M&A supported global equities on
Monday while expectations of higher euro zone interest rates
took the euro briefly to an 11-month high against Japan's yen.
Wall Street looked set to open higher, having hit its
highest intraday level on Friday since June 2008.
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 with a quarter of a
percent rise for the FTSEurofirst 300 <>.
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 cemented expectations that the
European Central Bank will raise interest rates on Thursday and
led to speculation the U.S. Federal Reserve may be getting
closer to withdrawing exceptional 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.
The single currency later slipped back.
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.
Key euro-priced bank-to-bank lending rates hit new 21-month
highs on Monday, boosted by rate hike expectations.
[]
The euro briefly popped above 120 yen <EURJPY=R> for the
first time since May 2010 and was later at 119.51 yen. It hit a
five-month high against the dollar of $1.4269 and was later at
$1.4215 <EUR=>.
"I think the euro is close to putting in a top now as the
monetary policy divergence story is almost fully priced," said
Lee Hardman, currency strategist at BTM-UFJ.
There was little respite for the euro zone 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, Neal Armstrong, Ian
Chua and Masayuki Kitano; Editing by John Stonestreet)
