* World stocks hit two-week highs, bank shares up
* Political risk simmers after attacks in India
* Oil falls towards $53 with demand uncertain
By Ian Chua
LONDON, Nov 27 (Reuters) - Global stocks rose to their
highest level in nearly two weeks on Thursday with European
equities buoyed by sharp gains in Asia and the United States,
dampening demand for safer assets such as government debt.
Renewed expectations that Washington will bail out the U.S.
motor industry and China's aggressive interest rate cut on
Wednesday helped to lift some of the gloom surrounding the
global economy.
But a string of dismal U.S. economic reports this week left
the dollar on a shaky footing while political risk emerged after
attacks in India's financial capital.
At least 101 people have been killed with hundreds more
trapped by Islamist gunmen in Mumbai after attacks on luxury
hotels, hospitals and a tourist cafe.
(For details please double click on [])
Still, with U.S. financial markets closed on Thursday for
the Thanksgiving holiday, analysts expect trading in Europe to
be lacklustre. While stocks were eking out gains, analysts said
the outlook was still bleak.
"It's going to be a bit of a nothing day, as we wait for
Black Friday in the United States -- the day where all retailers
go from red to black," said Justin Urquhart Stewart, investment
director at Seven Investment Management. "If it goes like the
UK, it could be a black Friday in the wrong sense."
The day after Thanksgiving, known as black Friday, is
traditionally the busiest time for U.S. retailers and investors
would undoubtedly be on the lookout for retail sales figures.
MSCI world equity index <.MIWD00000PUS> climbed 1.1 percent
to 218.20, having earlier reached a peak of 218.33 -- a level
last seen in Nov. 14.
The FTSEurofirst 300 <> index of top European shares
gained 2.4 percent, Britain's FTSE 100 index <> put on 2
percent and Germany's DAX <> climbed 2.6 percent.
Bank stocks were among the best performers, with Standard
Chartered <STAN.L> rising 11 percent and Societe Generale
<SOGN.PA> gaining more than 5 percent. Earlier, Japan's Nikkei
<> rose 2 percent, while MSCI's measure of other Asian
stock markets <.MIAPJ0000PUS> climbed 2.2 percent.
Meanwhile, the dollar eased against a basket of major
currencies with the dollar index <.DXY> slipping 0.3 percent.
"The greenback for long the beneficiary of safe haven flows
has over the past couple of days been forced on the defensive as
poor economic news weighed on the market," said Mitul Kotecha
Head of Global Foreign Exchange Strategy at Calyon.
"Yesterday's data releases added to these woes, showing a
huge drop in durable goods orders, a decline in personal
spending, a weak Chicago PMI and another big increase in initial
jobless claims. The latter points to a USD unfriendly non-farm
payroll report next Friday."
BOND YIELDS UP
European government bond yields crept up as stocks gained
ground, snapping recent declines that mirrored steep falls in
U.S. Treasury yields.
On Wednesday, the U.S. benchmark 10-year yield hit a 50-year
low below 3.0 percent after a flood of bleak U.S. economic
reports spurred demand for safer government debt.
The 10-year euro zone government bond yield <EU10YT=RR> rose
1.7 basis points to 3.296 percent, off a near three-year low of
3.272 percent set on Wednesday.
Meanwhile, U.S. crude oil <CLc1> fell more than $1 towards
$53 a barrel, reversing some of the 7 percent gains a day
earlier as investors fretted about falling demand.
Recent data showed U.S. crude stocks rose sharply last week
and U.S. September demand fell to its lowest level for any month
in more than a decade.
Gold <XAU=> traded at $812.45 an ounce, near a six-week high
of $830.10 set on Tuesday.
(Additional reporting by Sitaraman Shankar; editing by David
Stamp)
