* World stocks rise, Japan up 4.9 percent
* Dollar weaker, sterling gains
By Jeremy Gaunt, European Investment Correspondent
LONDON, Jan 27 (Reuters) - World stocks rose on Tuesday with
Japan climbing sharply as the government moved to rescue
capital-strapped companies and European shares boosted by a
positive German sentiment report.
The dollar was generally lower as traders reversed some
safety plays. Britain's battered pound gained around 1.8 percent
on the greenback.
Government intervention was a key theme for the day with
Japan throwing a $16.7 billion lifeline to companies threatened
by the global financial crisis.
It was an attempt to try to shield the shrinking economy
from more job losses and bankruptcies. Japanese state banks will
buy shares in non-financial companies threatened by collapsing
demand and frozen credit markets.
The move sent Tokyo's benchmark Nikkei <> up 4.9
percent for the day.
In a similar vein, Russia's RTS index <> was up 2.4
percent as news broke that the Russian government was reviewing
a capital injection worth up to 900 billion roubles ($27.36
billion) into commercial banks. []
Shares in Europe struggled but were supported by a rise in
the Ifo institute's gauge of German business confidence.
The pan-European FTSEurofirst 300 <> index was flat.
Overall, MSCI's main world stock index <.MIWD00000PUS> gained
1.2 percent.
In the meantime, a report showed that trust in business
plummeted worldwide last year.
Some 62 percent of respondents told the Edelman Trust
Barometer that they trusted businesses less than they had a year
ago, with respondents in the United States and Western Europe
more suspicious than those in emerging economies.
The biggest drops came in Ireland, where 83 percent of
respondents said they had lost trust in business; in Japan,
where 79 percent grew more wary; and in the United States, where
77 percent became more suspicious.
DOLLAR DECLINES
The euro jumped and Bund futures slipped after the rise in
Ifo. []
The euro <EUR=> was up more than 1 percent at $1.3308, after
hitting a week high.
"It's a short-term relief to see that there hasn't been a
further deterioration from the December reading but whether it
is sustainable is rather debatable," said Audrey Childe-Freeman,
senior FX strategist at Brown Brothers Harriman in London.
Britain's pound gained 1.9 percent to $1.4225 <GBP=> and the
dollar was up 0.6 percent against the yen to 89.52 <JPY=>.
Two-year Schatz yield <EU2YT=RR> was up 3 basis points at
1.698 percent. Earlier, the yield hit 1.747 percent -- its
highest since Jan. 8.
The 10-year Bund yield <EU10YT=RR> was flat at 3.326
percent. Earlier, the yield marched higher to 3.364 percent -
its highest since Nov. 26.
To see Reuters' Global Investing blog jump to:
http://blogs.reuters.com/globalinvesting/
(Editing by Andy Bruce)
