* MSCI world equity index up 1.6 percent
* U.S. data upholds economic recovery scenario
* Fed seen keeping low interest rate policy
* Gold hits record high; dollar under pressure
(Recasts with U.S. markets, updates indexes)
By Al Yoon
NEW YORK, Nov 4 (Reuters) - World stocks rose on Wednesday
after upbeat European and U.S. economic reports, while the U.S.
dollar slipped amid expectations the Federal Reserve will
reaffirm its commitment to ultra-low interest rates.
Gold hit a record high, adding to momentum sparked by the
International Monetary Fund's sale of bullion to India on
Tuesday.
U.S. stock indexes jumped after a employee services company
reported U.S. firms fired workers in October at the slowest
pace in more than a year, raising chances job growth could
reappear in early 2010. Click on [].
Gains extended after the Institute of Supply Management, a
business group, in its monthly survey found activity in U.S.
service businesses rose for a second straight month.
The Federal Reserve is expected to acknowledge a rise in
economic activity as it completes its policy meeting later on
Wednesday. But the Fed is also seen pledging to hold its target
short-term interest rate exceptionally low for "an extended
period" to provide a foundation for growth as unemployment
remains high.
Analysts are also watching the Fed for signs of how fast it
will unwind, or exit, emergency measures it used to boost
borrowing and lower mortgage rates.
"The Fed is unlikely to offer any hints into the timing of
an exit strategy and eventual rate rises, which may help stocks
to rise and consequently boost (the euro)," said Antje
Praefcke, currency strategist at Commerzbank in Frankfurt.
U.S. benchmark indexes rose, with the Dow Jones Industrial
Average up 106.03 points, or 1.09 percent, to 9,877.94. The
Standard & Poor's 500 Index climbed 9.48 points, or 0.91
percent, to 1,054.89 and the Nasdaq Composite Index gained
12.60 points, or 0.61 percent, to 2,069.92.
In Europe, a survey showed its dominant service sector
expanded for the second consecutive month and at its fastest
pace in 22 months. That was tempered by data showing Germany's
service sector expanded at its slowest rate in three months.
Markit's final euro zone services purchasing managers'
index of around 2,000 companies rose in October to 52.6, its
highest reading since December 2007, up from 50.9 in September.
It was revised up from forecasts and a flash reading of 52.3.
The MSCI world equity index <.MIWD00000PUS> rose 1.6
percent to 286.25 while the FTSEurofirst 300 index <>
gained 1.6 percent to 984.64. Emerging market stocks <.MSCIEF>
rose 2.6 percent.
The dollar fell against the euro and a basket of currencies
on Wednesday as firmer equity and commodity prices suggested
increased investor confidence, reducing demand for the U.S.
unit as a haven from risk.
The U.S. dollar index <.DXY> declined 0.64 percent to
75.899. The euro <EUR=> gained 0.82 percent to $1.4834. The
dollar rose 0.61 percent against the yen <JPY=> to 90.88 yen.
Spot gold <XAU=> hit record high of $1,091.60 an ounce amid
the IMF sale and the weaker dollar.
The IMF said on Tuesday it had sold 200 tonnes of gold to
the Reserve Bank of India for $6.7 billion, prompting
speculation central banks are diversifying assets.
"There is a long list of central banks which have very low
gold reserve ratios, and in aggregate central banks should be
net buyers of gold over the next year for the first time in 20
years," said Michael Lewis, head of commodities research at
Deutsche Bank.
U.S. crude oil <CLc1> rose 64 cents, or 0.8 percent, to
$80.24 a barrel.
U.S. government securities prices slipped as investors
sought greater risk and returns elsewhere, and as traders
prepared for $81 billion in debt set for sale by the Treasury
next week.
The benchmark 10-year U.S. Treasury note fell 9/32 in
price, sending its yield higher by 0.03 percentage point to
3.50 percent. Bund futures <FGBLc1> fell 0.34 percent.
(Additional reporting by Wanfeng Zhou in New York and
Natsuko Waki and Jan Harvey in London; Editing by Andrew Hay)
