* MSCI world equity index up 0.3 percent at 325.15
* Yen surges to record high of 76.25 per dollar
* Tokyo stocks off lows; bunds lower
By Natsuko Waki
LONDON, March 17 (Reuters) - The yen briefly hit record
highs versus the dollar on Thursday as quake-hit Japan's nuclear
crisis unleashed a global risk sell-off, while world stocks
ticked higher after Tokyo stocks came off earlier lows.
Risk aversion fanned expectations Japanese investors would
sell overseas assets, including lucrative carry trades, to bring
home funds. The yen rose as high as 76.25 per dollar <JPY=>,
levels which raise intervention concerns.
Japanese military helicopters dumped water on an overheating
nuclear plant. Japan's nuclear agency said three of the six
reactors at the Fukushima nuclear plant in northern Japan are
now relatively stable. []
"Some slightly more positive news from Japan over attempts
to avert a full-blown nuclear catastrophe has helped add a
degree of stability to shares during the Asian session, but the
situation is still very much hanging in the balance," Peter
Stanhope, Institutional trader at IG Markets, said.
MSCI world equity index <.MIWD00000PUS> rose 0.3 percent,
moving away from this week's three-month low. It hit 30-month
highs in mid-Feb but it has erased all of this year's gains.
The Thomson Reuters global stock index <.TRXFLDGLPU> was
down 0.15 percent. The FTSEurofirst 300 index <> rose more
than one percent as a recent sell-off attracted bargain hunters.
Tokyo stocks fell 1.4 percent <>, recovering from the
intraday low as cheap valuations attracted foreign buyers and
steadied the market. Earlier this week, Japanese stocks suffered
their worst two-day sell-off since 1987.
The CBOE's Volatility Index <.VIX>, Wall Street's fear
gauge, rose 21 percent to 29.40 on Wednesday, its highest since
July.
Emerging stocks <.MSCIEF> fell 0.7 percent.
U.S. crude oil <CLc1> rose one percent to $98.96 a barrel as
investors focused on concerns about potential supply disruptions
from an escalating turmoil in Bahrain.
Bahraini forces cleared a protest camp in Manama on
Wednesday after Saudi Arabian troops entered the country earlier
this week. []
German government bond futures <FGBLc1> fell 28 ticks.
INTERVENTION THREAT
The yen stood at around 78.95 per dollar. Traders said a
break of 79.75 unleashed a sharp selling of the dollar.
"The break below this level in an otherwise illiquid period
saw a move to 76.25 in a heartbeat. Price action has been
disorderly and reminiscent of price action during the height of
the global financial crisis," RBC said in a note to clients.
Japanese margin traders were cited as one of the main
factors behind the move as stop-loss orders were triggered in
their leveraged bets in currencies like the Australian dollar.
Traders also said foreign investors were scrambling to get
hold of yen to settle margin calls on bets on Japanese shares,
forcing them to turn to spot currency at times as well as
forwards <JPYF=> and cross-currency swaps <JPYCBS=TKTL>.
Japan's finance minister Yoshihiko Noda blamed speculation
for the yen spike and said he was closely watching markets.
Group of Seven finance leaders and central bankers will discuss
possible steps to calm markets at 2200 GMT. []
"I... believe that the U.S. and Europe will participate by
acting as an agent for Japan in buying foreign currency," Citi
analyst Greg Anderson wrote in a note.
The dollar <.DXY> fell 0.6 percent against a basket of major
currencies while the euro <EUR=> rose two thirds of a percent to
$1.3989. Gold <XAU=> slipped more than $5 to $1,394 an ounce at
one point [] []
(Additional reporting by Blaise Robinson; Editing by Toby
Chopra)
