* MSCI world equity index up 0.8 pct at 290.30
* New Zealand dollar sets 13-month high at 0.7210
* Euro/dollar hits 1-year high before G20, Fed meeting
* Crude oil futures jump back more than one percent
By Mike Dolan
LONDON, Sept 22 (Reuters) - World stocks climbed and the
dollar fell on Tuesday ahead of the Federal Reserve's two-day
policy meeting, with investors' search for higher returns
reflected in the New Zealand dollar's surge to 13-month highs.
European equities <> followed Asia markets
<.MIAPJ0000PUS> higher in early trading, while safe-haven U.S.
and German government bond prices <US10YT=RR> <FGBLc1> and the
U.S. dollar <.DXY> all retreated.
The dollar hit a one-year low against the euro <EUR=> at
$1.4793 early in European trade.
New Zealand's dollar <NZD=D4> -- often seen as a bellwether
of global risk appetite -- surged to a 13-month high above
$0.7210. []
The kiwi's move mirrored a wider bullishness.
World stocks, measured by MSCI's global index
<.MIWD00000PUS>, were up 0.8 percent. The index has now risen
over 26 percent this year, recouping more than half of last
year's losses, underpinned by repeated pledges by G20
policymakers to keep emergency economic support in place.
The G20 summit in Pittsburgh on Thursday and Friday is
expected to underline that commitment while the Fed's Open
Market Committee is expected to do likewise when its latest
meeting ends on Wednesday.
"The fundamental position for all equity markets has just
been improving and we know that the central banks, particularly
the UK and, importantly, the Federal Reserve, are committed to
keep interest rates low for a long period of time," said Mike
Lenhoff, chief strategist at Brewin Dolphin.
The Fed is expected to keep its benchmark Fed Funds rate
unchanged at 0.25 percent but investors are looking for signs of
how quickly it might remove its extraordinary programmes to
revive lending and economic activity.
By 0735 GMT, the FTSEurofirst 300 index <> rose 0.8
percent and U.S. stock futures were up 0.6 percent <SPc1>.
Global emerging market stocks <.MSCIEF> climbed 0.8 percent.
Energy stocks advanced as crude oil <CLc1> climbed to $70 a
barrel, bouncing back after its 3 percent decline on Monday.
BP <BP.L>, Royal Dutch Shell <RDSa.L>, BG Group <BG.L>,
Tullow Oil <TLW.L>, Repsol <REP.MC>, Total <TOTF.PA> and
StatoilHydro <STL.OL> added 0.5-2.1 percent.
DOLLAR WARY OF G20
Although trading volumes in Asia were capped by public
holidays in Japan, G20 discussions on plans to rebalance the
world economy were read by traders as dollar negative there and
this sentiment spilled over to Europe.
A document outlining the U.S. position ahead of the summit
said exporters, which include China, Germany and Japan, should
consume more, while debtors like the United States ought to
boost savings. []
Some traders said the dollar retreat was exaggerated by
technical trading. Options-related buying and strong demand from
Asian accounts pushed the euro up toward $1.48, while the dollar
also hit a 14-month low against the Swiss franc <CHF=>.
"Overall the trend for the dollar is still down," said
Marcus Hettinger, global FX strategist at Credit Suisse in
Zurich, adding he saw the euro at $1.50 by the end of the year.
Government debt markets were weighed down by a fresh wave of
new debt sales this week.
A substantial $112 billion in two-year, five-year and seven
year U.S. notes is due to come on stream this week, with a
record $43 billion two-year bond sale on Tuesday. [].
(Additional reporting by Atul Prakash, Jamie McGeever and
Jessica Mortimer in London; Susan Fenton in Hong Kong; Editing
by Mike Peacock)
