* World stocks flat on day; Europe banks hurt
* Wall Street set for modest rise
* Swiss franc falls sharply as safe-haven moves unwind
By Tamawa Desai
LONDON, Sept 10 (Reuters) - Global stocks were pressured by
concerns over banks ahead of a meeting to finalise European
capital rules at the weekend, while brighter U.S. and Chinese
data hurt the safe-haven appeal of the Swiss franc and yen.
Investors teetered between cautious optimism that the U.S.
economy would avoid another economic downturn, which boosted
U.S. bond yields overnight, and concerns about the fragile
European financial system.
"The bulls and bears have knocked each other senseless and
are lying in the corner. The bulls are waiting for employment
growth and the bears are waiting for European problems to blow
up," John Haynes, head of research at Rensburg Sheppards, said.
The MSCI world equity index <.MIWD00000PUS> was marginally
lower at 282.96.
News of a possible 9-billion-euro capital increase by
Deutsche Bank <DBKGn.DE> put some meat on the bones of worries
over lenders that have hampered markets this week, sending
banking shares 0.7 percent lower by midday European trade
<.SX7P>. The FTSEurofirst 300 index <> dropped 0.2
percent.
Central bank governors and heads of supervision from 27
countries meet in the Swiss town of Basel on Sunday to agree
tougher bank capital and liquidity standards, part of efforts to
prevent repeated future state rescues.
"Deutsche is the strongest and it's going first -- who's
behind them?," said Philip Isherwood, equity strategist at
Evolution Securities in London. "And there's the uncertainty
ahead of the weekend and whether Basel III is ratified, and on
what sort of time banks have to rebuild finances."
U.S. futures rose 0.2 percent <SPc1>, pointing to a higher
start after rising modestly the previous day.
YEN FALLS, YUAN SPECULATION
Asian shares hit a 4-month high after data on Thursday
showed U.S. initial jobless claims fell to a two-month low and
the trade deficit narrowed sharply in July. []
China on Friday posted stronger-than-expected import growth
in August, indicating a possible rebound in domestic demand, and
a 34.4 percent rise in exports year-on-year.
That boosted risk-taking sentiment, prompting the Swiss
franc to fall sharply against the euro and dollar.
Sentiment was further buoyed by news Dubai World agreed with
its creditors on restructuring its debts. []
"Seems risk being bought ... and people talking about the
Dubai news so putting two and two together," one London-based
currency trader said.
Buoyed by higher U.S. government bond yields, the dollar
recovered to 84.28 yen <JPY=>, its highest since reaching 85.23
yen after U.S. jobs data on Sept. 3. It was last at 84.00 yen,
still not far from a 15-year low of 83.34 yen hit last week.
Japanese Prime Minister Naoto Kan said Tokyo would take
decisive action if the situation grew more volatile, adding it
would try to persuade other countries should it take unilateral
action to stem the yen's rise. []
WILLING TO ACT
Kan has a slight edge over powerbroker Ichiro Ozawa ahead of
a party leadership vote next week but is seen too close to call.
A Reuters poll showed a win by Ozawa in the vote, which would
also decide who is prime minister, would give a short-term boost
to stocks but weaken Japanese government bonds and the yen.
[]
Ozawa reiterated on Friday that while solo currency market
intervention may not be effective, the government should make it
clear that it is willing to act.
China set the daily yuan mid-point at the highest since the
landmark revaluation in 2005, ahead of a U.S. congressional
hearing on China's currency practices next week. []
Beijing's announcement that it would bring forward its
monthly suite of economic data to Saturday from Monday
[] also raised market speculation of an interest
rate rise.
U.S. crude oil futures <CLc1> jumped to a near three-week
high near $76 a barrel after a shutdown of the biggest pipeline
supplying Canadian oil to refineries in the U.S. Midwest.
(Additional reporting by Simon Jessop, Simon Falush, Brian
Gorman and Naomi Tajitsu; editing by Patrick Graham)
