* MSCI world equity index up 0.25 pct to 305.94
* M&A, upbeat U.S. data lift sentiment
* Euro slips on Irish jitters; gold hits all-time highs
By Natsuko Waki
LONDON, Sept 27 (Reuters) - World stocks hit their highest
level in nearly five months on Monday while oil prices rose as
growing corporate merger activity and last week's upbeat U.S.
economic data encouraged investors to buy risky assets.
Unilever has agreed to buy U.S.-based hair care firm Alberto
Culver <ACV.N> [] for $3.7 billion in cash. A
source said China's Bright Food Group is exploring the purchase
of Britain's United Biscuits in a possible $3.2 billion deal.
Corporate activity is increasing as companies take advantage
of strong cash flows and historically low interest rates to look
for bargains and expand their business.
U.S. stocks posted their fourth week of gains last week
after data showing a rise in August business spending provided
the latest evidence that the recovery is on firmer ground.
"We are now seeing a lot of corporate activity. I don't
think we would see this unless there was a certain degree of
confidence that the outlook was reasonably promising," said Mike
Lenhoff, chief strategist at Brewin Dolphin.
"If you look at the overall background, we have got interest
rates likely to remain where they are in the major economies for
a long period of time, we have got a recovery that is under way
and is likely to be sustained, and the underlying tone of some
of the newsflow is strong."
The MSCI world equity index <.MIWD00000PUS> rose a quarter
percent to the level last seen early in May.
The Thomson Reuters global stock index <.TRXFLDGLPU> rose
around 0.3 percent.
The FTSEurofirst 300 index <> gained a quarter percent
while emerging stocks <.MSCIEF> rose 0.7 percent to their
highest level since July 2008.
Thomson Reuters data showed that global mergers and
acquisition activity announced so far this year totalled $1.678
trillion, surpassing volumes in the first nine months of 2009.
The activity in the June-September period totalled $599
billion, the third consecutive quarter of growth and up 25.6
percent from the same period in 2009, making it the strongest
quarter for worldwide M&A since Q3 2008.
U.S. crude oil <CLc1> rose 0.1 percent to $76.58 a barrel.
EURO ZONE WORRIES
Encouraging corporate news aside, investors remained
concerned about the outlook for the euro zone's banking sector.
The euro fell 0.3 percent to $1.3442 <EUR=>, retreating from
Friday's five-month high, after ratings agency Moody's cut Anglo
Irish Bank's unguaranteed senior debt by three notches and its
subordinated debt by six.
Investors have been nervous about possible restructuring of
Anglo Irish Bank's subordinated debt as government guarantees
for such instruments expire later this week.
The bund futures <FGBLc1> rose 45 ticks.
"Core debt is likely to stay more reactive to the periphery
with nothing imminent to ease concerns," said Credit Agricole
strategist Peter Chatwell.
"If the ECB does not start buying in a sizeable way,
illiquid markets such as Ireland and Portugal could slide
further, with the fear trade boosting Bunds in the short term."
The dollar <.DXY> held steady against a basket of major
currencies.
(Additional reporting by Atul Prakash; editing by Tim Pearce)
