(Adds Wall Street outlook)
By Natsuko Waki
LONDON, May 16 (Reuters) - World stocks powered to a fresh
four-month peak on Friday, driven by technology and oil shares,
while diverging growth outlooks between the United States and
elsewhere weighed on the dollar.
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,
which helped boost investor risk appetite.
"Europe is not going to be anywhere as badly affected with a
continuing slowdown in the real economy as the U.S. is," said
Adam Myers, market strategist at Credit Suisse.
"Europe will slow down but its slowdown is not going to have
the same impact on financial markets and lending and therefore
consumers than it will in the U.S."
The FTSEurofirst 300 index <> rose 1 percent while
MSCI's main world equity index <.MIWD00000PUS> rose 0.5 percent
to its highest since January.
The MSCI index is a whisker away from a 2008 high set in
January and on track to recoup all of the losses made since the
end of last year.
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 on
Thursday, its lowest since October, having shot up as high as
37.57 in January.
In Europe, technology shares <.SX8P> were the best
performing sector, helped by Thursday's gains in chip maker
Intel Corp <INTC.O> after Lehman Brothers raised its price
target on the stock. Oil shares also rose as oil resumed its
march towards record peak.
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.
U.S. stock futures rose 0.3 percent <SPc1>, indicating a
firmer open on Wall Street. Yahoo <YHOO.O> <YHOO.F> was trading
higher in Europe after the firm said late on Thursday it had
struck an advertising partnership deal with WPP Group <WPP.L>
that will let WPP buy ads on Yahoo's online ad exchange.
DIVERGING GROWTH OUTLOOKS
Signs of diverging economic outlooks in G3 (United States,
Japan and euro zone) countries weighed on the dollar earlier,
before the U.S. currency recouped its losses to stand steady on
the day <.DXY>.
The euro rose 0.2 percent at $1.5477 <EUR=>.
"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."
Earlier, data showed Hong Kong's economic performance
surprised on the upside, growing 1.8 percent in the first
quarter for annual growth of 7.1 percent.
Emerging sovereign spreads <11EMJ> tightened 2 basis points
while emerging stocks <.MSCIEF> were up more than 1 percent.
The June Bund future <FGBLM8> rose 13 ticks.
U.S. light crude <CLc1> rose 1.7 percent to $126.22 a
barrel, edging towards this week's record high near $127.
Gold <XAU=> rose to $885.30 an ounce, tracking oil higher.
(Additional reporting by Toni Vorobyova; Editing by Ron Askew)
