* World stocks down on worries about end of rally
* European shares down 0.5 percent, Japan 2.4 percent
* Wall Street set to open flat
* Dollar falls against major currencies
By Jeremy Gaunt, European Investment Correspondent
LONDON, Sept 2 (Reuters) - World stocks fell on Wednesday
after an overnight sell-off on Wall Street, with both Asia and
Europe rattled by concerns over the sustainability of this
year's equity rally.
The dollar was weaker against a basket of major currencies
<.DXY>, although Wall Street looked set for a flat start.
Anxiety about the health of financials and worries the 2009
global stock market rally may have run its course hit U.S.
stocks hard on Tuesday and then carried over.
Japan's Nikkei <> closed down 2.4 percent for the day
and Europe's FTSEurofirst 300 <> was down 0.5 percent
after earlier losing more than 1 percent.
It all took around three-quarters of a percent off MSCI'S
all-country world stock index <.MIWD00000PUS> and the
more-volatile emerging market component <.MSCIEF> lost 1.4
percent.
Concerns have risen over the summer that stocks have risen
so strongly since March that they are due a correction.
"The rebound from March has been remarkable. Year-to-date
gains for most of the indexes are strong, although we are still
below pre-Lehman Brothers levels," said Valerie Plagnol, chief
strategist at CM-CIC Securities, in Paris.
"But the glass is still half-empty. Macro data has improved,
but we're in a pattern of destocking-restocking, and the outlook
for consumer spending is still grim."
As a result, the focus is shifting towards Wall Street,
where the broad S&P 500 index <.SPX> has fallen 3.2 percent with
three consecutive losing sessions.
It fell 2.2 percent on Tuesday.
"The question now is whether Wall Street will consolidate at
this level or fall further," said Mitsushige Akino, chief fund
manager at Ichiyoshi Investment Management.
FOREX STEADY
The yen rallied broadly, hitting a seven-week high against
the dollar and other major rivals as the falling share prices
stoked more risk aversion.
"We are constructive on data, we are constructive on risk as
well, but price action short-term tells us that the market is
already positioned for a recovery," said Carl Hammer, currency
strategist at SEB in Stockholm.
"We need some more consolidation in the coming days before
moving higher in terms of risk appetite."
The dollar <JPY=> fell 0.2 percent to 92.69 yen according to
electronic trading platform EBS, having earlier hit its lowest
since mid-July.
The euro <EUR=> was up 0.1 percent at $1.42330.
Euro zone bond yields were also relatively steady. Two-year
paper <EU2YT=RR> was yielding 1.181 percent and Bunds
<EU10YT=RR> were yielding 3.222 percent.
(Additional reporting by Blaise Robinson, Elaine Lies and
Naomi Tajitsu; editing by Stephen Nisbet)
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