* MSCI world equity index down 0.9 pct at 230.95
* Dollar, yen benefit as risk cut back; gov bonds firmer
* Dollar, euro, sterling funding costs hit record lows
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 the previous day's weak U.S. retail data prompted
investors to cut back on risky assets after their 9-week rally.
Oil prices also fell, weighing on energy shares, 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.
The report broke 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 dollars, euros and sterling for
three months hit record lows in London, 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 0.5 percent. Oil
and gas shares <.SXEP> were main loser of the day.
U.S. crude oil <CLc1> fell 2 percent to $56.90 a barrel.
Emerging stocks <.MSCIEF> fell 2.2 percent. U.S. stock
futures were down around 0.5 percent <SPc1>, pointing to a lower
open on Wall Street.
"Equity markets now look 'toppy' after their fantastic run.
A measure of profit-taking is now sensible as the prices become
divorced from economic reality of conditions in the developed
countries," Peter O'Connor, deputy chairman at FundQuest, an
asset management arm of BNP Paribas, said in a note.
"Misjudging this wave will be painful. The cash raised can
be deployed successfully at lower levels later in the year."
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, the interbank cost of
borrowing three-month dollar, euro and sterling funds plumbed
fresh all-time lows. Three-month dollar rates fell to 0.85438
percent <LIBOR>.
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 50 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 0.15 percent against a basket of
major currencies while the yen rose 0.1 percent to 95.38 per
dollar.
(Additional reporting by Naomi Tajitsu; Editing by Victoria
Main)
