* Equities rise on economic, earnings hopes
* Euro gains on inflation pressure
* Egypt keeps Brent oil above $100
By Jeremy Gaunt, European Investment Correspondent
LONDON, Feb 1 (Reuters) - Investors shifted focus from
worrying about Middle East turmoil to concentrate on
fundamentals on Tuesday, lifting global stocks against a
background of improved economic data and corporate results.
Inflation expectations lifted the euro, helping drive the
dollar to a 12-week low against a group of other currencies.
The price of oil, the most sensitive indicator of market
unease about Egypt, eased, although Brent crude remained a few
cents above $100 a barrel.
Cairo was braced for a protest that aimed to bring a million
people onto the streets demanding an end to the 30-year-rule of
President Hosni Mubarak.
Oil's dip, however, was more related to China's factory
growth cooling to a five-month low, signalling demand may not
rise as quickly in the world's second-largest oil user.
The Egyptian crisis has prompted bursts of risk aversion on
financial markets over the past few days but investors on
Tuesday were trading on expectations of better prospects for the
world economy.
Purchasing manager indexes (PMI) for January are being
released through the day. Early indications were that they will
come in relatively strong.
Investors were encouraged by upbeat U.S. Midwest factory
activity and consumer spending figures on Monday.
"There is confidence in the market as companies are
reporting good figures," said Heinz-Gerd Sonnenschein, equity
markets strategist at Deutsche Postbank in Bonn.
German chipmaker Infineon <IFXGn.DE>, for example, raised
its full-year outlook, anticipating strong demand from the
automotive and industrial sectors.
World stocks as measured by MSCI <.MIWD00000PUS> gained a
quarter of a percent, with Europe's FTSEurofirst 300 <> up
0.4 percent.
Japan's Nikkei <> earlier closed up 0.36 percent.
Developed market stock indexes are generally in positive
territory for the year. By contrast, Citi reported that most
core government bonds lost money in January.
DOLLAR FALLS
The dollar fell to a 12-week low against a basket of
currencies, driven lower as the euro extended gains in the wake
of above-forecast inflation data.
The dollar index <.DXY> fell to its weakest since early
November.
Euros brought $1.3700 <EUR=>, up 0.1 percent after earlier
trading around $1.3746 <EUR=>, nearing a 10-week high hit last
week, buoyed by the view that euro zone interest rates would
rise before U.S. rates.
"Relative rate spreads are still favouring the euro to the
dollar," said John Hydeskov, currency strategist at Danske.
"Pressure has intensified for the ECB to do something about
inflation when it meets on Thursday."
Demand for euro zone government debt was flat to lower,
pushing up longer-term yields.
(Additional reporting by Harpreet Bhal and Naomi Tajitsu;
Editing by John Stonestreet)
