GLOBAL MARKETS-Stocks extend gains; euro jumps 1 pct

                                
 * World stocks lifted by economic hopes, recovery from lows
                                
 * Euro rises for 5th straight session
                                
 * Bunds, U.S. Treasuries fall

                                
(Updates all prices, changes quote, adds U.S. futures)
                                
 By Jeremy Gaunt, European Investment Correspondent
                                
 LONDON, June 14 (Reuters) - World stocks rose 1 percent on
Monday to their highest level in over a week and heading for
their fourth straight day of gains as investors banked on global
economic recovery to trump concerns over euro zone debt.
The euro also followed up its best week this year against
the dollar to rise 1 percent <EUR=>. It gained 1.6 percent
last week after slumping to a four-year low to the greenback.
                                
 A tentative equity rally since late May has lifted world
stocks <.MIWD00000PUS> by around 6 percent from their lows. The
index was up 0.9 percent by 1145 GMT on Monday.
                                
 Similarly, MSCI's main emerging market stock index <.MSCIEF>
has gained more than 9 percent since hitting a year low on May
25. It was up 1.4 percent on Monday.
                                
 While markets were spooked a week back by U.S. data showing
measly growth in private sector job creation, strong economic
data from China has reinforced a belief that the world recovery
is indeed gaining traction.
                                
 In the United States, President Barack Obama is stepping
up a push for more government spending to boost the economy via
tax breaks to some businesses and more jobless benefits, adding
to last year's $863 billion stimulus. [ID:nN13136667] 
                                
 Part of the current rally is due to this year's sell off --
world stocks are down 6 percent year to date 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 and that will support corporate earnings.
                                
 David Buik, senior partner at BGC partners said the wave of
risk aversion in May had left shares a bit "oversold".
                                
 "Second quarter earnings will be somewhat better than people
expect and there may be just a little bit of mileage left in the
current rally," Buik said.
                                
 The pan-European FTSEurofirst 300 <.FTEU3> was up 0.8
percent to a four-week high after strong euro zone industrial
output rekindled optimism over the bloc's economic outlook.
                                
 The rally was driven by banking, mining and commodity
stocks, all of which tend to gain when economic sentiment is on
the plus side.
                                
 A slight easing in worries over the euro zone crisis helped
the banking sector, with leading banks Barclays <BARC.L>, HSBC
<HSBA.L>, Societe Generale <SOGN.PA> and Deutsche Bank
<DBKGn.DE> rising 0.9 to 2.6 percent.
                                
 U.S. stock futures pointed to a higher open on Wall Street,
adding to last week's gains and tracking gains in global
equities, with futures for the S&P 500 <SPc2>, Dow Jones <DJc2>
and Nasdaq 100 <NDc2> all up around 0.8 percent.
                                
 Earlier, Japan's Nikkei <.N225> closed up 1.8 percent,
driven higher by exporters, again a group with a high
correlation to economic growth.
                                
 "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 on to."
                                
 
                                
 EURO REBOUND
                                
 The euro firmed against the dollar, as hedge funds covered
short positions on the single European currency.
                                
 The euro traded with gains of around 1 percent versus the
dollar at $1.2231 after hitting the day's high of $1.2258 on
trading platform EBS.
                                
 It has risen more than 2.4 percent over the past five
trading sessions but is still down around 15 percent year to
date.
                                
 "The dollar is softer against the euro as steady sentiment
helped risk currencies recover further," said Geoffrey Yu,
currency strategist at UBS. "Equity markets performed solidly,
especially on the back of expectations that policy will remain
relatively loose for an extended period globally."
                                
 Overall, however, negative sentiment about the euro,
prompted by fears for euro zone debt and the economic cost of
cutting it, remained, with analysts ascribing the streak of
gains to the market's pro-risk mood.
                                
 U.S. Treasuries fell, with benchmark 10-year note yielding
3.2804 percent, up 4.8 basis points on the day. Two-year yields
were up 3.2 basis points at 0.7661 percent. 
                                
 Euro zone bonds likewise weakened, with the 10-year Bund
yield <DE10YT=TWEB> at 2.629 percent, up 6 basis points.
                                
(Additional reporting by Sujata Rao, Neal Armstrong and
Joanne Freason; editing by John Stonestreet))