* World stocks lifted by economic hopes, recovery from lows
* Euro rises for 5th straight session
By Jeremy Gaunt, European Investment Correspondent
LONDON, June 14 (Reuters) - World stocks headed for a fourth
straight day of gains on Monday as investors banked on global
economic recovery to trump concerns such as euro zone sovereign
debt in providing a positive backdrop for corporate earnings.
The euro also followed up its best week this year against
the dollar to rise around half a percent <EUR=>.
Although it has been extremely volatile, investors have
launched a tentative rally since late May, lifting world stocks
<.MIWD00000PUS> by about 6 percent from their lows and half
embracing riskier assets.
MSCI's main emerging market stock index, for example, has
gained more than 9 percent since hitting a year low on May 25.
It was up 1.1 percent on Monday.
Part of the rally is due to the year's sell off -- world
stocks are down 6 percent year to day and 8.2 percent for the
second quarter. But it is also the result of a belief among many
investors that the underlying economic backdrop is relatively
positive.
China, in particular, is seen as pulling world recovery
forward, with the United States following.
"What is helping the market is the notion that a double dip
recession is not a big risk," said Bernard McAlinden, investment
strategist at NCB Stockbrokers in Dublin. "I think that is what
the markets are latching onto."
The pan-European FTSEurofirst 300 <.300> was up 0.6 percent,
driven by banking, mining and commodity stocks, all of which
tend to gain when economic sentiment is on the plus side.
Earlier, Japan's Nikkei <> closed up 1.8 percent,
driven higher by exporters, again a group with a high
correlation to economic growth.
EURO REBOUND
Improved attitudes towards riskier assets also lifted the
euro, hitting the dollar, in part because it prompted hedge
funds to cover their short positions on the European currency.
The euro was trading with gains of around 0.6 percent versus
the dollar at $1.2180 having traded as high as $1.2208 on
trading platform EBS.
It has risen close to 3 percent over the past five trading
sessions, but is still down around 15 percent year to date.
Overall, however, the negative sentiment about the euro,
prompted by fears for euro zone debt and the economic cost of
cutting it, remained.
"We've seen a good session for equities overnight. This
looks to be a pro-risk move, driven by the higher-yielding
currencies such as the Aussie. Fundamentally, nothing has
changed for the euro," said Kenneth Broux, market economist at
Lloyds Banking Group.
On euro zone bond markets, the two-year Schatz yield
<DE2YT=TWEB> climbed 1.4 basis points to 0.48 percent, while the
10-year Bund yielded <DE10YT=TWEB> 2.602 percent, up 3.4 basis
points as benchmark bond prices dropped, reflecting stronger
appetite for riskier investments.
(Additional reporting by Neal Armstrong and Joanne Freason;
Editing by Ruth Pitchford)
