* MSCI World up 0.3 pct, EM up 0.5 pct
* European stocks bouyed by rescue plan progress
* Euro little changed from Monday's four-year lows
By Claire Milhench
LONDON, May 18 (Reuters) - Global stocks edged higher on
Tuesday after a late rally on Wall Street and on cautious
optimism that progress is being made on the euro zone rescue
plan, but the euro itself remained under pressure.
Euro zone finance ministers said they hoped to clarify some
technical and legal details of the 750 billion euro ($925
billion) rescue plan this week []. Spain and
Portugal are also expected to outline measures to cut their
budget deficits.
European stocks took heart, but the euro <EUR=> struggled to
recover from Monday's four-year lows, and was little changed at
$1.24.
Although the euro's sharp fall makes it ripe for a bounce,
it is expected to stay under pressure over the longer term due
to concerns that planned euro zone austerity measures will stunt
European growth.
"In terms of levels, we expect to see a break lower. The
fundamental story remains for the dollar to strengthen against
the euro boths in terms of fundamentals and relative pricing on
the money market," said Kasper Kirkegaard, currency strategist
at Danske in Copenhagen.
The pound <GBP=> also rose, hitting a day's high against the
dollar at $1.4522 shortly after government data showed inflation
jumped more than expected in April. []
The U.S. Senate voted on Monday for the U.S. government to
oppose International Monetary Fund bail-outs to countries
unlikely to repay them, which added to the euro's woes
[].
World stocks as measured by the MSCI All-Country index
<.MIWD00000PUS> were up 0.3 percent whilst the more volatile
emerging markets index <.MSCIEF> was up 0.5 percent.
The FTSEurofirst 300 <> index of top European shares
also edged higher, up 1.11 percent in early trading, boosted by
late buying on Wall Street, with banks adding most points to the
index.
"While the European debt is a dark cloud hanging over
markets, the rest of the world looks quite bright," said Steven
Bell, a director at hedge fund firm GLC.
"There is a frightening scenario on TV sets, but the
European economy is chugging along, quite nicely, and U.S.
consumer spending is growing, so ultimately there is upside for
risk assets," he said.
Earlier, Asian stocks had fallen to three-month lows as
traders continued to fret about the impact of euro zone spending
cuts on exporters. Materials and consumer discretionary stocks
were the worst affected.
The markets were also troubled by a Chinese leading economic
indicator which appeared to show that growth may have already
peaked [].
Despite this, Shanghai stocks <> were up 1.31 percent
as the market tried to claw back some of Monday's 5.1 percent
tumble, its biggest one-day fall for eight months.
In Japan, the Nikkei <> closed little changed after a
choppy session.
BUND FUTURES DIP
In the fixed income markets, Bund futures dipped in early
trade with comments from European Union Economic and Monetary
Affairs Commissioner Olli Rehn that not all countries would need
to accelerate fiscal consolidation supporting a slight rise in
risk appetite. []
On Monday the European Central Bank also revealed that it
had purchased 16.5 billion euros of bonds through its Securities
Market Programme between 10 and 14 of May.
"The ECB has clarified its intervention," said Bernard
McAlinden, an investment strategist at NCB Stockbrokers in
Dublin. "The market is less concerned that the ECB is engaged in
outright money printing."
Peripheral bond yield spreads also nudged lower, supported
by limited central bank buying. The Greek/German 10-year bond
yield spread tightened to 512 basis points from about 552 at
Monday's settlement close.
The dollar <.DXY> was little changed against a currency
basket at 86.156. The yen was up 0.22 percent to $92.84.
(Additional reporting by William James, Brian Gorman, Naomi
Tajitsu, Simon Falush; editing by Jason Webb)
