* MSCI world equity index up 0.1 pct at 233.67
* BNP Paribas, euro zone services PMI and falling VIX help
* Yen jumps on BoA concerns; oil firmer
By Natsuko Waki
LONDON, May 6 (Reuters) - World stocks rose close to the
previous day's near 4-month high on Wednesday, helped by
better-than-expected results from BNP Paribas and euro zone data
showing firmer services business activity.
Oil and other risky assets also pushed higher, while the
low-yielding yen jumped after a source familiar with the result
of a U.S. banking stress test told Reuters Bank of America
<BAC.N> needed as much as $34 billion in extra capital.
Concerns about U.S. banks linger, but forecast-beating
first-quarter profits at French bank BNP Paribas <BNPP.PA>
helped the benchmark MSCI world equity index <.MIWD00000PUS>
reverse early losses to add to gains after rallying more than 30
percent since mid-March.
Also driving risk appetite, the Volatility Index <.VIX> --
Wall Street's fear gauge -- hit its lowest level since late
September, just after Lehman Brothers collapsed.
Furthermore, a key index of euro zone services business
activity staged its biggest one-month rise since December 2001
and firms were even more optimistic about the future, according
to Markit.
"A general feeling of well being is being felt across the
markets, with the joyous cries of the bulls beginning to drown
out the doom mongers," said Chris Hossain, senior sales manager
at ODL Securities.
"As we approach half way through the week, it will be
interesting to note how the banking stress test and the non-farm
payroll figures will impact on sentiment in the latter part of
the trading week."
The MSCI world equity index was up 0.1 percent on the day,
after hitting its highest level since January on Wednesday. The
index is now in positive territory for the year, gaining 2.9
percent since early January.
The FTSEurofirst 300 index <> rose 0.3 percent on the
day while emerging stocks <.MSCIEF> rose 0.5 percent.
U.S. stock futures <SPc1> were pointing to a weaker open on
Wall Street. Bank of America fell 10 percent in premarket trade.
Citigroup <C.N> fell after the New York Times reported the
bank may have to raise $5-10 billion in new capital in order to
meet a government requirement.
MORE THAW
The VIX index -- calculated from S&P 500 index options and
tracks the market's expectations of future volatility in over
the next 30-day period -- fell as low as 33.36 on Tuesday. The
index shot up as high as 89.53 last October, having traded below
20 before the start of the credit crisis in 2007.
Reflecting a recovery in credit markets, interbank rates for
3-month dollars declined again in London <LIBOR> after falling
below 1 percent for the first time on Tuesday.
Goldman Sachs noted the ratio between total assets in U.S.
money market mutual funds and the market capitalisation of the
New York Stock Exchange has dropped to 68 percent at the end of
April from an all-time high of 85 percent in February.
This compares with the 1989-2009 average of 30 percent
plus/minus 10 percent.
The U.S. bank estimates around $100 billion has moved out of
money market investments since the beginning of February -- less
than one tenth of the increase in money balances from the summer
of 2007.
Spreads between emerging market sovereign bonds and U.S.
Treasuries <11EMJ> fell below 500 basis points for the first
time since early October.
U.S. crude oil <CLc1> rose 0.5 percent to $54.11 a barrel.
The June Bund future <FGBLc1> fell 11 ticks, with eyes on a
monetary policy verdict by the European Central Bank on
Thursday.
The yen rose 0.6 percent to 98.40 per dollar <JPY=> while
the dollar <.DXY> rose 0.1 percent against a basket of major
currencies. The euro fell 0.1 percent to $1.3293 <EUR=>.
"The flow of leaks on the results of the U.S. banking stress
tests may mean a substantial immediate reaction in markets
tomorrow may be avoided," Barclays Wealth said in a note to
clients.
"But as today's news shows, details can yet take markets by
surprise, despite reassuring comments from policymakers."
(Additional reporting by Atul Prakash; editing by Chris Pizzey)
