* Stocks fall, MSCI world index down 0.9 pct
* Metal prices fall, but oil rises on Mideast violence
* Sterling rises after BOE delivers rate cut
By Dominic Lau
LONDON, Jan 8 (Reuters) - World stocks and metal prices fell
on Thursday after bleak data and poor corporate earnings fuelled
gloom about the economic outlook, while sterling rose after the
Bank of England cut interest rates to a record low.
The BoE cut borrowing costs by 50 basis points to 1.5
percent as expected amid signs Britain is heading for a deep
recession.
The financial crisis, triggered by a meltdown in the U.S.
subprime mortgage market, has spread far and wide with the
ensuing economic slowdown leading to higher unemployment and
slowing exports.
Sterling rose about two U.S. cents to $1.5247 <GBP=> and
firmed to a three-week high against the euro <EURGBP=>.
"I think it's pretty likely that it was sterling that
decided them to slow down the pace of cuts," said Brian
Hilliard, economist at Societe Generale. "I still think there's
more (monetary easing) in the pipeline.
The euro <EUR=> fell 0.6 percent to $1.3569 but the dollar
slipped more than 1 percent against the yen <JPY=> as falling
share prices sapped demand for risky investments.
Reports showed economic sentiment in the euro zone plumbed
record lows in December amid rising unemployment, and inflation
expectations tumbled. That further strengthened the case for a
European Central Bank rate cut next week [].
Also, German exports posted a record fall in November, as
demand for cars and others mainstays of the manufacturing
economy plummeted, compounding worries about the country's
already bleak 2009 outlook [].
ECB President Jean-Claude Trichet said in a magazine
interview published on Wednesday there had been a significant
deterioration in the euro zone economy in the last couple of
months [].
Corporates, meanwhile, are shedding staff to save costs and
are painting a darker picture of their earnings.
Intel Corp <INTC.O> on Wednesday cut its fourth quarter
sales forecast for the second time, while EMC Corp <EMC.N>, the
world's biggest maker of data storage equipment for businesses,
said it plans to cut 2,400 jobs, or 6 percent of its staff.
Global stocks as measured by the MSCI world index
<.MIWD00000PUS> lost 1.1 percent, with the pan-European
FTSEurofirst 300 <> shedding 0.9 percent and Tokyo's
Nikkei average <> down 3.9 percent.
Futures on U.S. Dow Jones industrial average <DJc1> and the
S&P 500 <SPc1> pointed to a weaker opening while Nasdaq futures
<NDc1> were also lower.
SLICK OIL, DULL METALS
Oil prices <CLc1> held around $43 a barrel on escalating
violence in the Middle East, after tumbling overnight.
Several rockets fired from Lebanon struck northern Israel on
Thursday, slightly wounding two police, in an attack seen as
linked to Israel's war on Hamas Islamists in the Gaza strip.
Metal prices, however, headed south on concerns over demand
in a tough economic environment.
Yields on benchmark 10-year U.S. Treasuries <US10YT=RR> were
steady, but yields on the 10-year Bund <EU10YT=RR> narrowed 3
basis points.
The premium in European corporate debt, which are seen as
risky as equities, also fell. The Markit iTraxx Crossover index
<ITEXO5Y=GF>, made up of 50 mostly "junk"-rated credits, was at
961 basis points, 12 basis points tighter versus late on
Wednesday.
Morgan Stanley said in a report on Europe's economy that it
preferred investment grade corporate bonds over equities because
more bad news had been priced in.
"In interest rates, market face a range of non-traditional
government interventions, from bank capital injections to
quantative easing, which can and will distort markets," the
broker said.
"Markets will have to absorb an unprecedented amount of
government borrowing, which together with further central bank
easing should steepen the yield curve eventually."
