* World stocks hold gains on risk appetite
* Emerging market stocks surge to pre-Lehman levels
* U.S. housing data pressures dollar, some stocks
(Updates with U.S. markets, changes byline, dateline,
previous: LONDON)
By Manuela Badawy
NEW YORK, Jan 5 (Reuters) - Hopes for an improved global
economic recovery supported world stocks on Tuesday as
investors increased their appetite for risky assets and moved
out of the safe-haven U.S. dollar.
A day after global equities touched 15-month highs on the
first day of 2010, some investors took a pause in their
risk-taking activity, yet were still upbeat about market
direction.
The MSCI's all-country world stock index <.MIWD00000PUS>
was up 0.19 pct, still at levels not seen since October 2008.
While the MSCI emerging market index <.MSCIEF> was up 1.09
percent, the highest level since August 2008, before the
collapse of U.S. investment bank Lehman Brothers triggered
financial recession worldwide.
"I think the underlying trend for the short-term is still
up. Corporate confidence is very high and earnings are
continuing to be revised up. The picture now is for a more
solid type of recovery outlook," said Mike Lenhoff, strategist
at Brewin Dolphin in London.
The CBOE volatility index <.VIX>, Wall Street's main
barometer of investor fear, fell 2.35 percent. A drop in the
so-called VIX index indicates improved investor sentiment.
U.S. stocks briefly extended losses after pending home
sales in November dropped 16 percent after rising for nine
straight months.
But the S&P 500 and the Nasdaq erased the losses after the
manufacturing sector showed further signs of improvement for
the month of November and offering assurance the economic
recovery remained on track.[]
The Dow Jones industrial average <> was down 0.2
percent at 10,562.87. The Standard & Poor's 500 Index <.SPX>
was up 0.18 percent, at 1,134.99. The Nasdaq Composite Index
<> was up 0.01 percent, at 2,308.71.
The U.S. dollar was pressured by the drop in pending home
sales as investors were skeptical about the stabilization of
the housing market.
"The dollar ... is acting in a more traditional fashion and
weakening on poor U.S. data," said Jacob Oubina, senior
currency strategist, at Forex.com in Bedminster, New Jersey.
The U.S. dollar was down against a basket of six major
currencies, with the U.S. Dollar Index <.DXY> down 0.10 percent
at 77.446. The euro <EUR=> was slightly up at $1.4419, having
climbed to around $1.4483 earlier in the day to hit its
strongest in nearly three weeks.
The dollar <JPY=> fell more than 1.0 percent to 91.52 yen,
on track for its biggest one-day percentage loss in nearly a
month.
U.S. Treasury debt prices were up as bargain hunting
persisted in the wake of recent losses, with benchmark 10-year
notes <US10YT=RR> up 10/32 in price, yielding 3.78 percent,
versus 3.82 percent at Monday's close.
Last week, 10-year yields rose as high as 3.918 percent,
their highest since early June, after surprisingly strong
weekly jobless claims figures bolstered expectations among some
that Friday's payrolls report will show employment growth.
The FTSEurofirst 300 <> index of top European shares
closed down 0.1 percent after the U.S. home sales data.
"The housing figure from the U.S. did put a bit of dampener
on everything. If that housing market gives in the U.S. then it
would be seriously bad news for the recovery."
Drugmakers took the most points off the European index
after France cancelled over half the flu vaccines it ordered to
combat the H1N1 flu virus. []
Japan's Nikkei <> inched up 0.3 percent to 10,681.83,
its highest close since Oct. 3 2008.
(Additional reporting by Joanne Frearson in London and
Gertrude Chavez-Dreyfuss in New York)
