* MSCI All-Country index recoups losses since March 11
* Portugal bailout appears likely after PM resigns
* Euro pares losses, government bonds turn flat
* Oil eases 0.2-0.3 percent, gold steady near record
(Updates throughout)
By Amanda Cooper
LONDON, March 24 (Reuters) - Global stocks inched higher on
Thursday and are now higher than when Japan's earthquake and
tsunami struck, buoyed by confidence that the world economic
recovery remains on track.
The euro also recovered early losses to trade a touch higher
despite negative signs from banking and politics in Portugal and
Spain, the two countries now at the centre of Europe's
continuing debt crisis.
The single European currency was set for its largest weekly
slide since early January, after the Portuguese parliament
rejected a series of austerity measures and prime minister Jose
Socrates stepped down, although equity markets rallied after
gains in the heavyweight mining sector offset losses elsewhere.
"Sentiment is still relatively good. The cycle is good. We
are still mildly optimistic on the overall picture," said Joost
de Graff, senior portfolio manager at Kempen Capital Manageent
in the Netherlands.
Surveys on Thursday showed economic recovery continued in
March, shrugging off Japan's disaster, although Middle East
tensions are sending prices rocketing and the impact of public
sector cutbacks in Europe is a risk. []
[]
The MSCI All-Country index <.MIW0000PUS> was last up 0.1
percent. In Asia, Tokyo's Nikkei <> fell 0.2 percent. It
remains 8 percent below its close when the earthquake hit on
March 11.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
European sovereign debt crisis: http://r.reuters.com/hyb65p
Q+A-What's next for Portugal? []
Yen intervention: http://link.reuters.com/sub68r
Japan earthquake in graphics http://r.reuters.com/fyh58r
U.S. crude futures chart: http://link.reuters.com/maq68r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
EU BAILOUT
Much of the anxiety over the euro zone's debt problems had
been soothed by the prospect of a longer-term reinforcement of
the EU bailout fund.
But this has now been delayed until June, while Portugal
faces what are viewed as unsustainable borrowing costs ahead of
multi-billion euro bond repayments in April and June.
The premium investors demand to hold Portuguese debt rather
than benchmark German Bunds hit euro-lifetime highs, while the
premium to hold other peripheral debt also rose, reflecting the
growing preference among bondholders to own higher-rated paper.
"If -- and this is a big if -- there is a bailout for
Portugal, the question would be how it would be negotiated with
a government in essentially a caretaker mode," said David
Forrester, currency strategist at Barclays Capital in Singapore.
The euro <EUR=> was last up 0.1 percent against the dollar
at $1.4101, having fallen earlier to a low of $1.4049, while
against the yen <EURJPY=> it was flat at 114.11 yen.
The yen itself was steady against the dollar at 80.95 yen
<JPY=>, although market players are still wary Japan may
intervene to sell the currency if the dollar breaches 80 yen.
Euro zone government bonds were flat, with Bunds having
pared some of their earlier gains to trade at 3.229 percent
<DE10YT=TWEB>, while Portuguese 10-year yields <PT10YT=TWEB>
rose 11 basis points to 7.931 percent, leaving the premium to
Bunds at a euro-lifetime high of 470 basis points.
European Union leaders begin a two-day summit on Thursday
but the political turmoil in Portugal and looming elections in
other countries are expected to delay any tough decisions to
address the region's debt problem.
An official euro zone source estimated in January that if
Portugal asked for international aid, it might need between 60
billion to 80 billion euros (up to $113 billion).
European shares edged higher as gains in the mining sector
offset some of the weakness in banking stocks, which came under
pressure from persistent concern about the euro zone's finance
and after Moody's downgraded 30 Spanish banks. []
The FTSEurofirst 300 <> was up 0.2 percent at 1,113.49
points, while S&P 500 futures <SPc1> rose 0.1 percent, pointing
to a modestly higher start on Wall Street later. [] []
Brent crude <LCOc1> was off 0.2 percent at $115.35, down for
a second successive trading day. []
Spot gold <XAU=> traded around $1,43999 an ounce, in sight
of its record $1,444.40 set earlier in the month. []
(Additional reporting by Kirsten Donovan and Harpreet Bhal
in London and Alejandro Barbajosa and Alex Richardson in
Singapore)
(Reporting by Amanda Cooper; editing by Patrick Graham)
