* MSCI world equity index up 1 pct at 269.25
* Oil also up 1 pct
* Dollar broadly weaker
By Jeremy Gaunt, European Investment Correspondent
LONDON, July 6 (Reuters) - World stocks bounced higher on
Tuesday from a recent five-week low in a broad risk rally that
boosted oil prices, while investors sold off the dollar and
government bonds.
MSCI's all-country world stock index <.MIWD00000PUS> was up
1 percent, with Europe putting in gains of around 2.5 percent.
The FTSEurofirst 300 <> bounced back from six-week
closing lows with a gain of 2.5 percent, led by mining shares,
while Japan's Nikkei <> closed up 0.8 percent, coming off a
seven-week low.
U.S. stock futures were also up around 1 percent <.SPX>,
pointing to a stronger start on Wall Street, which re-opens
after a holiday on Monday. Emerging market stocks <.MSCIEF>
gained more than 1 percent.
"Markets are a bit oversold. The decline has been quite
strong," said Joost de Graaf, senior portfolio manager at Kempen
Capital Management in The Netherlands.
"There are (also) hopes that second-quarter earnings will be
OK and will lift some of the negative atmosphere."
The MSCI world index is still down more than 10 percent so
far this year. Stocks were weaker on Monday in response to data
showing a slower-than-expected improvement in U.S. employment.
Investors have been beset by concern that the global
economic recovery is slowing enough to send some countries into
a double-dip recession.
This is combined with nagging fears that the recovery seen
so far is all down to government action, which may soon end.
"Awash with private sector debt (in its various forms), the
world's major economies may struggle to maintain their forward
impetus once policy stimulus, both fiscal and monetary, is set
on the path towards normalisation," BNY Mellon said in a note.
"Early signs of ebbing momentum are of concern."
DOLLAR HIT
The more risk-friendly mood hit the dollar, which fell a
third of a percent against a basket of major currencies <.DXY>.
It was particularly weak against the high-yielding
Australian dollar <AUD=>, which rose more than 1 percent at one
stage on cautiously optimistic remarks from the Australian
central bank after it left interest rates unchanged as expected.
[]
"The strength in the Aussie was somewhat surprising given
the change in the RBA's wording suggests it may keep interest
rates lower for some time," said Ulrich Leuchtmann, currency
strategist at Commerzbank in Frankfurt.
"But risky assets are performing well, so there's been a
gradual return of risk appetite."
The euro gained a third of a percent to $1.2575 <EUR=>.
Euro zone government bonds were sold off as a result of the
rise in equities, with the bund future down 53 ticks <FGBLc1>.
The 10- and 2-year benchmark yields rose two to three basis
points.
Oil prices rebounded after several days of declines, heading
towards $73 a barrel on the view that oil's recent slide had
been overdone. []
(Additional reporting by Naomi Tajitsu; Editing by Susan
Fenton)
