* MSCI world equity index up 0.4 pct at 254.87
* Emerging market stocks hit 2009 peak
* Dollar stabilises after fall; oil falls
By Natsuko Waki
LONDON, July 21 (Reuters) - World stocks approached a
9-month high on Tuesday while emerging stocks hit a 2009 peak as
investors anticipated upward surprises from earnings results due
later given a run of strong reports over the past week.
On Wall Street on Monday, the S&P 500 index hit an
eight-month closing high after troubled lender CIT <CIT.N>
reached a deal with bondholders for $3 billion in emergency
financing, according to a source familiar with the situation.
Ahead of a twice-yearly testimony to Congress later in the
day, Federal Reserve chairman Ben Bernanke reassured that loose
monetary policy with near-zero interest rates would be around
for a while longer in an article in the Wall Street Journal.
With general improvement in risk appetite, investors are
looking to more corporate earnings results from firms including
Volvo <VOLVb.ST>, Yahoo <YHOO.O>, Apple <AAPL.O>, Coca-Cola
<KO>, Merck <MRK> and Dupont <DD>.
"The general sense as results season is upon us is that
there will be fewer negative surprises than in 2008... it will
be comfortable which is helping increase risk appetite," said
Jeremy Batstone Carr, equity strategist at Charles Stanley.
MSCI world equity index <.MIWD00000PUS> rose 0.4 percent to
levels, approaching the high set last month, which was a level
last seen in October.
The FTSEurofirst 300 index <> rose a quarter percent.
British supermarket group Morrison <MRW.L> rose 7.6 percent and
led retailers higher after saying full-year results would beat
expectations.
Nordea <NDA.ST>, the Nordic region's biggest bank by value,
rose 1.2 percent after reporting a smaller-than-expected drop in
second-quarter operating profits and raised its full-year
outlook.
Emerging stocks <.MSCIEF> hit their highest since late
September -- levels last seen after Lehman Brothers went
bankrupt.
According to Thomson Reuters data, the second-quarter
earnings growth rate for the S&P 500 improved to -35.2 percent
as of end last week from -35.7 percent, thanks largely to
better-than-expected earnings from companies in the financial
sector.
However, all sectors in the S&P 500 are expecting a
year-over-year decline in earnings with the materials, energy,
financials and industrials anticipating the lowest earnings
growth rates for the quarter.
U.S. crude oil <CLc1> fell a quarter percent to $63.83 a
barrel.
The September bund futures <FGBLc1> rose 18 ticks.
The dollar <.DXY> recovered slightly from a seven-week low
against a basket of major currencies while the euro fell 0.2
percent to $1.4200 <EUR=> after hitting a six-week high on
Monday.
Bernanke will start his twice-yearly testimony on the
economic outlook and monetary policy before the House Financial
Services Committee at 1400 GMT. Analysts say Bernanke was likely
to make clear again that there is no rush to tighten.
"Whilst there are obvious signs that the economic data is
improving or at least showing signs of bottoming out, recent
rhetoric from the Fed has remained dovish," Calyon said in a
note to clients.
"The economic contraction may be slowing, and the eventual
need to boost inventories should spur production, but
consumption looks set to be constrained by rising unemployment.
Hence, Bernanke should reiterate that the slack in the economy
will keep the inflation outlook subdued."
