* MSCI world equity index down 1 pct at 230.59
* Dollar, yen benefit as risk cut back; gov bonds firmer
* Dollar funding costs hit record lows in Asia
By Natsuko Waki
LONDON, May 14 (Reuters) - World stocks fell for a fourth
straight day on Thursday while the low-yielding dollar and yen
advanced as weak U.S. retail sales data prompted investors to
cut back on risky assets after their nine-week rally.
Oil prices also fell while government bonds rose as
investors took a break from a risk buying frenzy after data
showed on Wednesday sales at U.S. retailers fell for a second
straight month in April, breaking a string of more upbeat
reports that had suggested the economic slump was abating.
"Yesterday's retail sales were a blow to the green shoots
theory because that theory had been predicated on the resilient
U.S. consumer," said Lee Ferridge, vice president and senior
macro strategist at State Street.
However, market indicators showed a recovery is still on
track. The cost of borrowing medium-term dollars hit a record
low in Asia, suggesting banks are more willing to lend, while
shipping costs hit a 2009 high on Wednesday on the back of
strong Chinese demand for commodities.
MSCI world equity index <.MIWD00000PUS> fell 0.9 percent,
extending a decline after hitting a six-month high on Monday.
The index is on track for the first weekly loss in 10 weeks.
The FTSEurofirst 300 index <> lost 0.85 percent.
Emerging stocks <.MSCIEF> fell 2.4 percent.
"Historically equity markets start to price in the turn in
the economic cycle about two quarters before the actual data
starts to improve," Georgina Taylor, equity strategist at Legal
& General Investment Management, said in a note.
"However, for the market gains to be sustainable, economic
growth needs to pick up as well as stabilise."
U.S. crude oil <CLc1> fell 1 percent to $57.45 a barrel.
PULLBACK
The pullback in stocks comes after a near 40-percent rally
since mid-March which generated optimism even among central bank
governors, including European Central Bank President Jean-Claude
Trichet, who said earlier this week the global economy might
have turned around the corner.
In a further sign of easing tensions, dollar funding costs
hit record lows in Singapore, with three-month interbank dollar
rates <SIUSDD=ABSG> falling to 0.87718 percent from 0.90143
percent on Wednesday.
On Wednesday, the Baltic Exchange's main sea freight index
<.BADI>, which tracks rates to ship dry commodities, hit a new
2009 high, driven by continued demand for goods by China.
The index, which gauges the cost of shipping resources
including iron ore, cement, grain, coal and fertiliser, rose to
2,332 points on Wednesday from 2,253 on Tuesday.
The June bund futures <FGBLc1> rose 14 ticks, helped by
comments from ECB Governing Council member Ewald Nowotny who
said key interest rates may approach a lower boundary of zero.
The dollar <.DXY> rose 0.2 percent against a basket of major
currencies while the yen rose 0.1 percent to 95.42 per dollar.
(Additional reporting by Naomi Tajitsu; editing by Chris
Pizzey)
