(Corrects exchange rate in 12th paragraph)
* World stocks struggle <.MIWD00000PUS>
* China cuts interest rates by 108 bps
* EU considers fiscal stimulus after Fed's $800 bln plan
* Investors concerned about cost of stimulus packages
By Veronica Brown
LONDON, Nov 26 (Reuters) - World stocks struggled on
Wednesday, with European and Japanese markets falling, while the
low-yielding Japanese yen rose as investors counted the cost of
global fiscal stimulus packages to boost flagging economies.
Europe was considering a more than 130 billion euro plan
following the U.S. Federal Reserve's $800 billion effort to
bolster credit and mortgage markets on Tuesday.
China also cut interest rates by 108 basis points, aiming to
ensure liquidity in the banking system and to help to boost
slowing economic growth.
Positive reaction to the financial resuscitation efforts was
starting to give way to concern about the bottom-line impact on
government balance sheets.
"The Fed's measures were supposed to be good for risk," said
Geoffrey Yu, currency strategist at UBS in London. "It's
obviously positive for some aspects of the economy, but people
are starting to worry about balance sheet risks ... In general,
problems on the U.S. economic front haven't changed at all."
Real economy malaise also continued to sap sentiment towards
risk. Toyota Motor Corp <7203.T> had its top-notch credit rating
cut for the first time in a decade. []
World stocks as measured by the MSCI index were slightly
lower <.MIWD00000PUS>, while European stocks were down 0.4
percent, off their lows <>. Tokyo's Nikkei 225 index
earlier fell 1.3 percent <>.
Falling crude prices <CLc1> weighed on oil shares in Europe,
adding to a general air of deflating sentiment as the stimulus
packages were digested, leaving investors to wonder what it
would take to get interbank markets working properly again.
"You can't force banks to lend if they don't want to.
Earnings worries are still there," said Bernard McAlinden,
investment strategist at NCB Stockbrokers in Dublin.
Interbank lending rate ranges for three-month dollar, euro
and sterling funds held relatively steady on Wednesday versus a
day ago, while spreads between interbank and expected policy
rates stayed at high levels [].
Scepticism about the Fed and other stimulative packages kept
investors' preference for the yen intact.
The low-yielding Japanese unit, a bellwether of attitudes
towards risk, stayed firm versus the euro <EURJPY=> at 123.50
yen, but gains were trimmed after the China rate cut.
Deleveraging flows also kept the dollar well-supported against a
basket of currencies <.DXY> and the euro <EUR=>.
"There have been so many steps taken by the U.S.
authorities, leaving the impression they are doing anything in
their capacity, but not necessarily with consistency," said
Mitsuru Sahara, a senior manager at Bank of Tokyo-Mitsubishi
UFJ.
"The market reaction has become increasingly cool, as it has
become accustomed to new measures coming one after the other
without feeling that the market has hit a bottom," he said.
