* Global stocks set to record best month in over 6 years
* European shares up on month, still down overall for Q1
* Crude, metals rebound, helped by equities
* Dollar falls against euro
By Dominic Lau
LONDON, March 31 (Reuters) - Global stocks looked set on
Tuesday to achieve their best monthly performance in more than
six years in March, while commodity prices also rose and the
Japanese yen fell.
The MSCI World index <.MIWD00000PUS> put on 0.7 percent and
was on course to record its biggest monthly rise since October
2002. But the global stock index is still down 12 percent this
quarter after losing 22.7 percent in the October-December period
last year.
"The market has snapped back from yesterday. The falls were
probably overdone. Now it is a wait and see approach for
investors with important U.S. sentiment data coming out later --
the Chicago PMI figures and U.S. consumer confidence," said
Heino Ruland, strategist at Ruland Research in Frankfurt.
Euro zone inflation plunged to an all-time low in March,
halving its annual rate from February and strengthening the case
for a deep European Central bank interest rate cut just two days
before the ECB meets.
The FTSEurofirst 300 <> index of top European firms
rose 2 percent, and UK retailer Marks & Spencer <MKS.L> soared
more than 10 percent after reporting a smaller-than-feared drop
in fourth quarter underlying sales, lifting other embattled
retailers.
The pan-European index is up for the month, but still down
13 percent in the first three months of the year.
The futures for Dow Jones industrial average <DJc1>, S&P 500
<SPc1> and Nasdaq <NDc1> rose 1 to 1.2 percent, pointing to a
higher open on Wall Street.
UBS said its equity risk appetite indicator improved to -1.7
from -1.81, moving higher for the third straight week.
"The indicator remains above extreme risk averse territory,"
it said in a note. "Twelve month equity returns when the index
is between -3 and -1.5 have tended to be low and even negative
historically."
Japanese unemployment rose to a three-year high in February
as a deepening recession put more people out of work, and Prime
Minister Taro Aso said he planned to submit an extra budget to
fund a new stimulus package but was mum on how much the
government would spend to shore the recession-hit economy.
The announcement came two days before world leaders gather
in London to discuss ways out of the global crisis.
Tokyo's Nikkei average <> ended down 1.5 percent.
Japanese blue chips managed to gain more than 7 percent this
month as the country's financial year draws to a close, but were
down 8.5 percent in the first quarter.
The yen <JPY=> also fell broadly, while the euro rose 0.95
percent to $1.3327 <EUR=>.
"A lot of today's trading is all about quarter-end flows and
the end of the Japanese fiscal year, with dollar/eyn gaining as
the new fiscal year gets underway," State Street foreign
exchange strategist Lee Ferridge said.
World Bank President Robert Zoellick said the dollar would
remain the world's dominant reserve currency and a strong U.S.
currency is critical to pull the world out of crisis.
STRONG DOLLAR NEEDED
Base metal prices rose, and crude <CLc1> rose above $49 a
barrel, recouping some of the previous session's 7 percent loss
as stock markets edged up.
Leaders from the Group of 20 rich and big developing
economies will address a crisis that has felled major banks and
cost millions of jobs as the world faces its biggest recession
since the 1930s.
Officials have already acknowledged the G20 summit would
fall short of an overhaul of the world economy. U.S. and
European leaders have also differed over whether more spending
or more regulatory reform would be a better response to the
crisis.
Government bonds were mixed. The benchmark 10-year U.S.
Treasury yield <US10YT=RR> rose by 2 basis points but the euro
zone benchmark 10-year bund <EU10YT=RR> fell by 4 basis point.
(Additional reporting by Joanne Frearson and Jessica Mortimer
in London; Editing by Ron Askew)
