By Natsuko Waki
LONDON, May 16 (Reuters) - World stocks powered to a fresh
four-month peak on Friday after firmer technology shares boosted
Wall Street, while this week's stronger-than-expected growth
data in the euro zone and Japan boosted the euro and the yen.
Financial stocks rose, with a focus on a report by the
Financial Times that Britain's biggest banks are preparing to
swap between 80-90 billion pounds of mortgage-backed assets for
Bank of England Treasury bills.
The amount is nearly twice what the central bank envisaged
when it unveiled the scheme to unblock the frozen bank-lending
market.
Data from Japan showed the economy unexpectedly picked up
pace, growing 0.8 percent in the first quarter as exports
weathered a U.S. downturn. This followed Thursday's data which
offered forecast-beating growth in the euro zone.
These economies could still follow the United States into a
slowdown, but evidence that growth is more than holding up,
combined with signs of solid corporate profits especially in the
United States, helped boost investor risk appetite.
"Confidence does seem to be coming from the suggestion that
the U.S. economy has ridden out the storm and may well be
building a base from which to spring higher," said Neil Parker,
strategist at Royal Bank of Scotland.
The FTSEurofirst 300 index <> rose 0.4 percent while
MSCI's main world equity index <.MIWD00000PUS> rose a third of a
percent to its highest since January.
Reflecting an increasingly risk-friendly environment, the
Volatility Index <.VIX>, a key gauge of fear which measures
projected stock market volatility through the S&P, hit 16.08,
its lowest since October, having shot up as high as 37.57 in
January.
In Europe, technology shares <.SX8P> were one of the
best-performing sectors, helped by a battle to control Yahoo
<YHOO.O> and gains in chip maker Intel Corp <INTC.O> after
Lehman Brothers raised its price target on the stock.
DIVERGING GROWTH OUTLOOKS
Signs of diverging economic outlooks in G3 (United States,
Japan and euro zone) countries weighed on the dollar, which fell
0.3 percent against six major currencies <.DXY>.
The euro rose a third of a percent to $1.5499 <EUR=> while
the yen rose half a percent to 104.22 per dollar <JPY=>.
"The general background remains pro-risk," Steven Pearson,
chief strategist at Bank of Scotland, in a note to clients.
"Although the strength in Japan's GDP report is a mirage...,
the idea that the less leveraged advanced economies and the
emerging world are de-coupling further from leveraged
Anglo-Saxon style economies could well take root from here."
Emerging sovereign spreads <11EMJ> were unchanged while
emerging stocks <.MSCIEF> were up 0.7 percent.
The June Bund future <FGBLM8> rose 30 ticks.
U.S. light crude <CLc1> rose 0.3 percent to $124.47 a
barrel, edging towards this week's record high near $127.
Gold <XAU=> was largely steady at $880.90 an ounce.
(Additional reporting by Rebekah Curtis; Editing by Gerrard
Raven)
