GLOBAL MARKETS-Hopes for economy lift equities, knock yen

                                
 * World stocks rally on economy hopes
                                
 * European shares up 1.6 percent, Japan 1.2 percent
                                
 * Dollar rises about 101 yen
                                
 * Euro zone government bonds weak
                                
 
                                
 By Jeremy Gaunt, European Investment Correspondent
                                
 LONDON, April 6 (Reuters) - World stocks rose for a fifth
straight session on Monday as investors sought bargains against
a background of increasing optimism about the global economy.
                                
 Underlining the mood, the Japanese yen, which usually gains
when investors worry about risk, fell to a six month low against
the dollar.
                                
 "Hopes that recent global economic stabilisation packages
will work has revived sentiment," U.S. financial giant Citi said
in a note to clients, although it also warned against
overconfidence.
                                
 MSCI's all-country world index <.MIWD00000PUS> rose 0.8
percent for a 7.3 percent gain so far in April. It is now down
less than 5 percent for the year.
                                
 U.S. home sales, auto sales data; company purchasing
managers' surveys, and reports on credit in the UK, have all
offered a more optimistic readout than that to which investors
have become accustomed.
                                
 (For an overview click on [ID:nL6444863]; for the top five
themes of the week click on [ID:nL6964065])
                                
 The FTSEurofirst 300 <.FTEU3> index of top European shares
was up 1.6 percent, tracking strong gains in Asia and a late
rally in the United States on Friday. The index has risen around
21 percent since hitting a lifetime low on March 9.
                                
 Earlier, Japan's Nikkei average rose 1.2 percent to strike a
three-month closing high. The benchmark <.N225> gained 108.09
points to 8,857.93.
                                
 No impact was seen from Sunday's launch by North Korea of a
long-range rocket that flew over Japan. [ID:nSP469853]
                                
 
                                
 SELLING YEN
                                
 Helping Japanese stocks, especially exporters, was the
falling yen.
                                
The Japanese currency fell broadly as investors took on
perceived riskier assets. The dollar rose above 101 yen <JPY=>,
the highest in almost six months, while the euro also extended
gains against the Japanese currency to levels last seen in
October <EURJPY=>.
                                
 "Markets are taking heart that the pace of economic
contraction is fading," said Lee Hardman, currency economist at
Bank of Tokyo-Mitsubishi UFJ. "That is helping risk assets and
prompting the unwinding of safe assets."
                                
 The dollar was up 0.8 percent at 101.15 yen, after rising to
101.23 yen <JPY=>, the highest since Oct. 21, 2008, according to
Reuters data. The dollar, however, lost ground against other
major currencies as risk appetite improved.
                                
 The euro gained 0.4 percent to $1.3534 <EUR=>.
                                
 Euro zone government bond prices were weak. Two-year bond
yields <EU2YT=RR> were 1 basis point higher at 1.543 percent,
having risen as high as 1.62 percent, and 10-year yields
<EU10YT=RR> were flat at 3.243 percent, around highest since
mid-February.
 (Additional reporting by Tamawa Desai; editing by Patrick
Graham)
 
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