* World MSCI stock index hits two-year high
* U.S. stocks edge down, awaiting Fed announcement
* Above-forecast U.S. economic data buoys dollar
* Oil reaches six-month high before retreating
(Updates with U.S. markets' open; changes dateline,
previously LONDON and byline)
By Walker Simon
NEW YORK, Nov 3 (Reuters) - World stocks hit a two-year
high on Wednesday and oil climbed to a six-month peak as
investors anticipated that the U.S. central bank would within
hours announce hefty debt purchases to spur the flagging U.S.
economy.
Stronger-than-expected data on U.S. job creation as well
as on factory orders and the service sector helped the dollar
rally against the yen and rise against the euro. Against a
basket of major trading-partner currencies, the dollar<.DXY>
rose 0.16 percent,
"The data reinforces the fact that the U.S. economy is
bottoming, if not gradually beginning to recover," said
Greg Salvaggio, vice president of trading of Tempus
Consulting in Washington. "We're obviously at the bottom of
the U in the recovery."
Against the Japanese yen, the dollar <JPY=> jumped 0.9
percent to 81.37 from a previous session close of 80.620.
The euro <EUR=> dipped 0.2 percent to $1.4008.
U.S. Treasury debt prices rose for a second straight day
as investors prepared for the Federal Reserve to announce at
2:15 p.m. (1815 GMT) what markets have priced in as $500
billion in debt purchases over five months, with an open-ended
commitment to buy more -- if necessary.
The benchmark 10-year U.S. Treasury note <US10YT=RR>
gained 14/32, with the yield slipping to 2.539 percent from
2.954 percent late on Tuesday. The 30-year U.S. Treasury bond
<US30YT=RR> shot up 31/32, with the yield dropping to 3.879
percent from 3.94 percent the previous day.
The MSCI world equity index <.MIWD00000PUS> rose as high
as 320.42, bringing gains this year to about 7.5 percent and
marking the highest level since mid-2008. By late morning,
though, the index had given up the gains to trade at 318.71,
down 0.2 percent.
WALL ST REFLECTS UNCERTAINTY
But the uncertainty about the scope of the Federal
Reserve's imminent announcement kept many investors on the
sidelines and U.S. stocks softened.
On Wall Street, The Dow Jones industrial average <>
declined 15.36 points, or 0.14 percent, to 11,173.36. The
Standard & Poor's 500 Index <.SPX> shed 2.73 points, or 0.23
percent, to 1,190.84. The Nasdaq Composite Index<> fell
8.78 points, or 0.35 percent, to 2,524.74.
In contrast, the MSCI emerging equities index <.MSCIEF>
hit its highest since June 2008. With the prospect of the Fed
seeking to push long-term interest rates even lower, investors
have flocked to emerging markets for higher, though riskier
returns.
An index of top European shares <> hit a session
high at 1,098.83, but then gave up its gain to trade at
1,089.86, down 0.4 percent.
In commodities markets, U.S. sweet light crude futures
<CLc1> touched a six=month high of $85.04 a barrel, partly due
to the perception that the Fed's expected moves will spur the
U.S. economy and increase energy demand.
But oil later pulled back some as the dollar rose higher,
with the front-month U.S. crude futures contract up 54 cents,
or 0.6 percent, at $84.44 per barrel in late morning trading.
Gold prices slipped as the dollar's rally advanced, with
spot gold prices <XAU=> off $2.30, or 0.17 percent, at
$1,354.70 an ounce.
The dollar has a marked inverse relationship to gold and
oil as a weaker dollar makes it cheaper for non-U.S. investors
to buy them,
Some economists said the latest batch of U.S. economic data
released on Wednesday reinforced that the view the economy was
poised for further growth.
In data seen as a prelude to the government's monthly
non-farm payrolls report on Friday, payrolls processor ADP
said in a report on Wednesday that U.S. private-sector
companies added 43,000 jobs in October.
The U.S. government also said new orders received by U.S.
factories rose more than expected in September to post their
largest gain in eight months.
The U.S. services sector grew more quickly than expected
in October, its 10th straight month of expansion, according to
the Institute for Supply Management's non-manufacturing sector
index. The sector, which comprises mostly service-sector
firms, accounts for about two-thirds of U.S. economic
activity.
(Reporting and writing by Walker Simon; Additional reporting
by Caroline Valetkevitch and Gertrude Chavez-Dreyfuss; Editing
by Jan Paschal)
