* MSCI world equity index down 0.1 pct at 311.17
* Buffett invests $5 bln in Goldman Sachs
* Mood still fragile on uncertainty over Washington bailout
By Natsuko Waki
LONDON, Sept 24 (Reuters) - World stocks slipped back and
government bonds firmed on Wednesday after Warren Buffett's
investment in Goldman Sachs <GS.N> failed to erase anxiety over
the prospects for Washington's $700 billion bank bailout.
Billionaire investor Buffett's Berkshire Hathaway Inc
<BRKa.N> <BRKb.N> will invest $5 billion in Goldman, a major
boost for the Wall Street bank whose shares fell 50 percent from
their 2007 record high in this month's market turmoil.
However, the news failed to significantly boost risky assets
after Washington's push for quick congressional approval of its
financial rescue plan hit a wall of opposition among senators
who said the plan puts taxpayers at risk.
Federal Reserve chairman Ben Bernanke testifies again later,
after warning lawmakers on Tuesday that a failure to act could
doom the economy to recession.
"There is a lot of indecision in the market. It's just a
question of getting through the stalemate in the Congress," said
Angus Campbell, head of sales at Capital Spreads.
"It's a bailout of the financial sector, which in the
long-term will have an effect on the economy. But either way
it's a question of putting toxic debt onto government's books
rather than corporate books and it won't necessarily mark the
bottom of the financial market."
After dipping in and out of positive territory for most of
the morning session, the FTSEurofirst 300 index <> fell
0.3 percent. The MSCI world equity index <.MIWD00000PUS> lost
0.15 percent.
U.S. stock futures <SPc1> halved early gains to stand up 0.3
percent, still pointing to a stronger start on Wall Street.
The December bund future <FGBLc1> rose 50 ticks as jittery
investors sought safety in government bonds.
A survey showing German corporate sentiment deteriorated for
the fourth month running in September added to gloom over the
euro zone economy, which has moved half way into recession after
second-quarter growth contracted.
INTERBANK TENSIONS
Strains in the interbank money market lingered despite
efforts by central banks around the world to inject liquidity.
Three-month dollar rates <LIBOR> fixed at least 150 basis
points above expected U.S. interest rates for the same period in
London while the cost of borrowing euros and sterling also rose.
The Fed moved for the second time within 24 hours to provide
liquidity, acting in concert with Australia and Scandinavia,
while the euro zone, Britain, Japan and Australia injected
billions of dollars into their banking systems.
Once a byword for safety and liquidity, the short-term
lending market where banks lend to each other has repeatedly
seized up in the financial crisis because of increasing worries
over the creditworthiness of borrowers.
The dollar <.DXY> fell 0.15 percent against a basket of
major currencies while the euro rose a quarter percent to
$1.4682 <EUR=>.
"We are seeing people reduce the risk aversion play in the
short term," said Lee Hardman, currency economist at Bank of
Tokyo-Mitsubishi-UFJ.
"People will likely stick in relatively tight ranges on
uncertainty over the bailout plan... The only thing that is
certain right now is uncertainty."
Emerging sovereign spreads <11EMJ> were steady while
emerging stocks <.MSCIEF>also erased early gains to stand steady
on the day.
U.S. light crude <CLc1> rose 2.3 percent following forecasts
of a drop in U.S. crude stocks. Gold rose <XAU=> was steady at
$890.20 an ounce.
(Additional reporting by Dominic Lau and Tamawa Kadoya)
