* Global stocks up 0.9 percent, Europe gains 0.3 percent
* Wall Street set for positive start
* Investors expecting rate cuts from ECB, BoE, RBA
* Dollar, yen weaker as high yielders gain
By Jeremy Gaunt, European Investment Correspondent
LONDON, Nov 3 (Reuters) - Global stocks kicked off a new
month with gains and Wall Street looked set to join them on
Monday against a background of easier monetary policy designed
to pull economies away from severe recession.
The dollar and yen weakened, continuing a see-sawing trend
that has followed the global appetite for stocks.
Investors have been cautiously shopping for bargains after
shares and commodity prices posted their biggest decline ever in
October on fears of a deep recession in the world economy.
MSCI's all-country world stock index <.MIWD00000PUS> lost
19.9 percent for the month, the largest monthly fall in the
benchmark's 20-year history in its current form.
Reflecting the current volatility in markets, however, the
index was up more than 11 percent last week, its best
performance in 20 years. []
On Monday, the index was up nearly 0.9 percent with its
emerging market counterpart <.MSCIEF> gaining more than 2
percent.
"Given the massive scale of the reflation efforts we now see
globally, be it in the form of rate cuts or fiscal packages, the
odds of a more durable rally have increased, albeit that the bad
news will not be over," said Gerhard Schwarz, head of global
equity strategy at UniCredit in Munich.
Much of Monday's sentiment was driven by expectations of
lower interest rates from central banks concerned about tumbling
growth and tight lending markets.
The European Central Bank, the Bank of England and the
Reserve Bank of Australia are all expected to lower rates this
week to support their struggling economies.
They are all seen easing by at least 50 basis points. Last
week, the U.S. Federal Reserve cut its key rate by 50 basis
points to 1 percent and the Bank of Japan (BoJ) cut its rate to
0.30 percent from 0.50 percent.
Emerging giants China and India also cut rates last week.
"You saw action from the Fed, action from the Bank of Japan,
action from other central banks around the word ... so the
expectation is high that the ECB will cut rates," said
Heinz-Gerd Sonnenschein, equity strategist at Postbank in Bonn,
Germany.
The pan-European FTSEurofirst 300 <> was up 0.4
percent, slightly off its highs. Japan's stock markets were
closed for a holiday.
SEARCH FOR YIELD
The euro and other high-yielding currencies such as sterling
gained against the dollar, while the yen retreated.
"The equity market seems to have stabilised and that is
feeding through to improved sentiment for risky assets on the
currency side," said Lee Hardman, currency economist at Bank of
Tokyo-Mitsubishi-UFJ.
High-yielders tumbled sharply last month as investors fled
riskier assets and were forced to shed assets to raise funds,
repatriated back into the dollar and yen. The euro saw its
biggest monthly fall against the dollar and yen since the single
currency's inception in 1999.
On Monday, however, the euro was up nearly 1 percent at
$1.2843 <EUR=> and up 1.7 percent at 127.41 yen <EURJPY=>.
Sterling was up three-quarters of a percent against the
dollar at $1.6188 <GBP=> and the dollar was up 0.7 percent at
99.10 yen <JPY=>.
Euro zone government bond yields were mixed.
Two-year bond yields <EU2YT=RR> were up 1 basis point at
2.574 percent. Ten-year yields <EU10YT=RR>, however, were 6
basis points lower at 3.836 percent.
(Additional reporting by Rebekah Curtis; editing by Stephen
Nisbet)
