* Investors lift equities on hopes for economic stimulus
* European shares gain 1.4 percent, Japan 2.07 percent
* Wall Street set to open just down
* Dollar rises, euro at three-week low
By Jeremy Gaunt, European Investment Correspondent
LONDON, Jan 5 (Reuters) - Investors moved into European and
Japanese stocks 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 kept oil
prices firm <CLc1>, while the dollar climbed, sending the euro
to a three-week low.
Wall Street looked set to open a touch lower, however, as
investors took profits on strong gains racked up last week.
Equities have been 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.
The pan-European FTSEurofirst 300 <> gained 1.4
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 <.MIWD00000PUS> gaining 3.6 percent for
the month. So far this year, the index is up another 2.7
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 $46.00, down slightly on the day.
An Iranian military commander called on Islamic countries to
cut oil exports to Israel's supporters in response to the Jewish
state's offensive in Gaza, although an OPEC source later played
down the likely impact of the call [].
Oil has gained by around 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 $1.36, 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 2.2 percent on the day at around $1.3570
<EUR=>, while the dollar rose 1.4 percent to 93.50 yen <JPY=>.
Demand for euro zone government bonds fell sharply.
The interest rate-sensitive two-year Schatz yield <EU2YT=RR>
was up 4.2 basis points at 1.784 percent and the 10-year Bund
yield <EU10YT=RR> gained 12 basis points to 3.073 percent. Bond
prices move inversely with yields.
(Additional reporting by Brian Gorman; editing by Patrick
Graham)
