* MSCI world equity index up 0.3 pct at 342.63
* China trade data boosting risk appetite; inflation eyed
* Euro hits 3-week low on WestLB woes; oil rebounds
By Wanfeng Zhou
NEW YORK, Feb 14 (Reuters) - World stocks climbed towards
last week's 30-month high on Monday as talk of
slower-than-expected Chinese inflation eased fears of policy
tightening and the euro fell on worries about European banks.
U.S. crude oil <CLc1> rose above $86 a barrel, rebounding
from a 10-week low set last week as protests in Yemen, Iran and
Algeria highlighted the potential for unrest to disrupt oil
supplies. Concerns about political uncertainty in the Middle
East also pushed prices of safe-haven gold <XAU=> higher.
The euro <EUR=EBS> dropped to a three-week low of $1.3428
on trading platform EBS on concerns surrounding the fate of
German lender WestLB. It last traded down 0.6 percent at
$1.3466.
German financial regulator BaFin is involved in talks about
the restructuring of WestLB as the bank struggles to come up
with a rescue deal, sources told Reuters. []
European finance ministers assessed ways of strengthening
their 440 billion euro rescue fund on Monday, but Germany
remained reluctant to bolster the facility known as the EFSF
without commitments on closer economic coordination.
"We have some serious questions over what's going to happen
with the EU meeting this week and whether or not they will come
to any kind of conclusion on the EFSF," said Andrew Busch,
global currency and public policy strategist at BMO Capital
Markets in Chicago.
Weakness in the euro helped push the U.S. dollar index,
which measures the greenback versus a basket of major
currencies, to a three-week high of 78.873 <.DXY>.
Financial markets showed a muted reaction to President
Barack Obama's budget proposal that would cut the U.S. deficit
by $1.1 trillion over 10 years and set the stage for a bitter
fight with Republicans who want tougher spending controls. See
[]
"The proposal today puts fiscal policy back on the agenda
and that is something investors tend to like," said Marc
Chandler, head of currency strategy at Brown Brothers Harriman
in New York.
The MSCI world equity index <.MIWD00000PUS> rose 0.3
percent, having hit its highest level since August 2008 last
week. Thomson Reuters' global stock index <.TRXFLDGLPU> gained
0.4 percent.
U.S. stocks <> <.SPX> were little changed as another
day of persistently below-average volume suggested investors
were unwilling to chase gains that carried stocks to 2 1/2-year
highs last week.
The FTSEurofirst 300 index <> rose 0.3 percent to hit
a 29-month peak.
CHINESE DATA
Traders said 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 China's central bank would have to
raise interest rates aggressively, which could slow down
growth.
Optimism about the Chinese economic outlook also grew after
data showed the country's trade surplus fell to its lowest in
nine months in January when imports surged, underscoring robust
domestic demand. Solid export growth also hinted at solidifying
recoveries in the U.S. and European economies.
"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."
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China's trade surplus http://link.reuters.com/weh97r
GDP of G3 economies http://link.reuters.com/dac97r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Emerging stocks <.MSCIEF> added 1.3 percent measured by the
Morgan Stanley Capital index. Shanghai stocks <> hit an
eight-week high, scoring the index's biggest single-day
percentage gain since mid-December.
U.S. Treasury prices slipped though benchmark yields
remained below their recent highs as investors awaited data
later in the week to gauge the state of the economy and how far
yields may need to rise to account for growth.
(Additional reporting Julie Haviv in New York and Natsuko Waki
in London; Editing by Andrew Hay)
