* Investors lift equities on hopes for economic stimulus
* European shares gain 1.4 percent, Japan 2.07 percent
* Dollar rises, euro at three week low
* Gaza, Russia tension keeps oil price firm around $46.50
By Jeremy Gaunt, European Investment Correspondent
LONDON, Jan 5 (Reuters) - Investors jumped into equities on
Monday, the first full day of 2009 trading for many, as low
prices and hopes for a global economic recovery later this year
prompted a shift into riskier assets.
Fears of spreading trouble in the Middle East, meanwhile,
kept oil prices firm <CLc1>. The dollar climbed, sending the
euro to a three-week low.
Equity investors were boosted by U.S. President-elect Barack
Obama's plans for as much as $310 billion in tax cuts, the
latest in a series of measures aimed at tackling a financial
crisis that has plunged major economies into recession.
World stocks as measured by MSCI <.MIWD00000PUS> were up
around 0.2 percent on the day with riskier emerging market
shares <.MSCIEF> gaining 2 percent.
The pan-European FTSEurofirst 300 <> gained 1.3
percent and Japan's Nikkei average <> closed up 2.07
percent.
"Expectations that Obama will come in with a big stimulus
package are helping," said Bernard McAlinden, investment
strategist at NCB Stockbrokers. "The market is looking for any
signs that some of the forward-looking indicators ... have
bottomed."
Equities ended 2008 with something of a rally, with the MSCI
all-country world index gaining 3.6 percent for the month. So
far this year, the index is up another 2.9 percent.
It all pales, however, in comparison with a more than 43
percent loss for the whole of last year.
GEOPOLITICS
Oil prices climbed above $48 a barrel before falling back to
around $46.50.
There were reports that an Iranian military commander had
called on Islamic countries to cut oil exports to Israel's
supporters in response to the Jewish state's offensive in Gaza,
[]
Oil has gained in the region of 24 percent since Israel
began its bombardment of Gaza in retaliation from rocket
attacks.
Russia's move to cut natural gas supplies to Ukraine also
put upward pressure on prices.
On foreign exchange markets, the euro fell to a three week
low versus the dollar below $1.37, with the U.S. currency also
striking a 3-week peak against the yen.
"Stocks are firming and there seems to be a slight bias
towards risk taking," said Steve Barrow, senior currency
strategist at Standard Bank in London. "To some extent the risk
play is affecting euro/dollar."
The euro was down 1.4 percent on the day, having hit a low
of $1.3676 <EUR=>, while the dollar rose 0.7 percent to 92.86
yen <JPY=>.
Demand for euro zone government bonds fell.
The interest rate-sensitive two-year Schatz yield <EU2YT=RR>
was up 2.6 basis points at 1.763 percent and the 10-year Bund
yield <EU10YT=RR> gained 7 basis points to 3.023 percent. Bond
prices move inversely with yields.
(Additional reporting by Brian Gorman, editing by Mike Peacock)
