* World stocks rally on economy hopes
* European shares up 1 percent, Japan 1.2 percent
* Wall Street looks to positive start
* 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.
Wall Street looked set to join Europe and Asia higher.
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 0.7
percent for a more than 7 percent gain so far in April. It is
now down around 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.
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themes of the week click on [])
The FTSEurofirst 300 <> index of top European shares
was up 1 percent, a bit of fits highs but 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 <> 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. []
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 0.3 percent to $1.3525 <EUR=>.
Euro zone government bond prices were weak. Two-year bond
yields <EU2YT=RR> were 2 basis point higher at 1.553 percent,
having risen as high as 1.62 percent, and 10-year yields
<EU10YT=RR> were up 2 basis points 3.259 percent, around their
highest since mid-February.
(Additional reporting by Tamawa Desai; Editing by Victoria
Main)
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