(Updates with Wall Street outlook, Libor)
By Natsuko Waki
LONDON, April 7 (Reuters) - World stocks hit a fresh
one-month high and the dollar rose on Monday, bolstered by
firmer commodity prices and growing expectations that banks are
making progress in cleaning up their credit-related troubles.
Optimism also stemmed from speculation that finance chiefs
from the Group of Seven rich nations, meeting in Washington this
weekend, are considering drastic steps to help banks and markets
battered by the U.S. mortgage meltdown.
Australia and New Zealand Banking Group <ANZ.AX> said it
expected much higher bad debt provisions in the first half of
fiscal 2008, becoming the latest bank to reveal damage from the
credit crunch.
ANZ shares fell sharply, but banking stocks in Europe climbed
as efforts by financial firms to come clean and a possible joint
plan by governments to help them bolstered sentiment.
"Fingers crossed the outlook has changed, and we've moved
away from the panic that's really gripped the markets to a
greater degree of confidence that most of the global economy
will be able to avoid a recession," said Neil Parker, strategist
at Royal Bank of Scotland.
The FTSEurofirst 300 index <> rose 0.8 percent on the
day. MSCI main world equity index <.MIWD00000PUS> was up 0.4
percent, hitting its highest since late February and adding to a
rise of nearly 4 percent last week.
European banking stocks <.SX7P> rose 1.5 percent, while
mining shares were up on firmer metal prices. U.S. stock futures
were up around 0.8 percent <.SPc1>, indicating a firmer open on
Wall Street later.
The dollar was up 0.3 percent against a basket of major
currencies <.DXY> and around 0.1 percent higher at $1.5709 per
euro <EUR=>. The June Bund future <FGBLM8> was down 30 ticks,
pressured by firmer stocks.
MONEY MARKET STRESS EASES
Stress in the interbank markets eased further with the cost
of borrowing one- and three-month sterling funds fell by its
largest amount since January while three-month dollar and euro
rates also eased at the daily London fixing <LIBOR>.
The world's major central banks have been providing funds to
help ease stress in bank-to-bank lending. Moreover, the
G7-backed Financial Stability Forum is discussing an
unprecedented joint plan to stabilise financial markets.
These steps include tax-funded bank bailouts to tackle a
worst-case scenario, public mortgage repurchases and a sort of
collective coming out of banks -- simultaneous disclosure of
financial positions using the same model.
Hopes for official action also improved European credit
market sentiment. The iTraxx Crossover index <ITCRS5EA=GFI>, the
most-widely watched indicator for European credit market
sentiment, tightened 20 basis points to 463 bps.
U.S. light crude <CLc1> was up 1.2 percent at $107.55 a
barrel after OPEC's secretary general suggested the group saw
little need to pump more oil.
Gold <XAU=> tracked oil higher, jumping to $916.70 an ounce
-- still below record highs of $1,030.80 hit in March.
Firmer commodity prices also helped emerging market assets.
Emerging sovereign spreads <11EMJ> tightened 6 bps while
emerging stocks <.MSCIEF> rose 1.1 percent.
(Additional reporting by Rebekah Curtis, editing by David
Christian-Edwards)
