* Euro hits 5-mth high vs dollar after ECB tender results
* Dollar index at 8-month low
* Markets reacts calmly to Irish bank bailout tap, Spain cut
* World stocks set to post best quarterly gains in a year
By Dominic Lau
LONDON, Sept 30 (Reuters) - The euro rose to a five-month
high against the dollar on Thursday, helped by signs that banks
are becoming less dependent on official support and a slight
easing in concerns over Ireland and Spain.
World stocks, however, were flat on the last trading day for
what is set to be the best quarter in a year, and there was a 28
percent fall for Irish lender Allied Irish Banks <ALBK.I> after
the government said it was taking a controlling stake.
Gold <XAU=> hit a record high of $1,314.85 per ounce. The
precious metal has risen for eight straight quarters and is up
5.9 percent in July-September on concerns of the prospect of
more moves by the U.S. to pump money into the economy.
Results of a tender for ECB six-day money -- where banks
took far less than expected -- also helped ease concerns about
the European banking sector and Ireland's putting of a price tag
of more than $68 billion on bailing out its own lenders.
"The meltdown of Anglo Irish (Bank) has been a considerable
shock for Ireland, but with a credible rescue plan, it limits
the risk of negative surprises going forward, and that in a
sense is bringing relief to the market," said Philippe Waechter,
head of economic research at Natixis Asset Management.
The euro <EUR=> rose 0.3 percent to $1.3664, after hitting
$1.3671, its highest since April 12, having fallen on the
initial announcement that the cost of Ireland's bailout was
rising. []
Most of what was said had been priced in, however, and the
euro remains in bullish form, up nearly 12 percent against the
dollar this quarter, its best quarterly gains since 2002.
8-MONTH MINIMUM
The dollar <.DXY> hit an eight-month low against a basket of
major currencies and the yen <JPY=> fell 0.5 percent to 83.30
yen, edging close to the level on the day when Tokyo intervened
in the foreign exchange market to curb the yen's strength.
The dollar has been weighed down by concerns of further
quantitative easing by the Federal Reserve, which wants to
stimulate a flagging economic recovery.
Markets also reacted calmly to Moody's downgrade of Spain to
Aa1, the third agency to remove its top-notch triple-A credit
rating in what was a widely expected move. []
The premium for holding peripheral government bonds rather
than euro zone benchmark German Bunds fell, with the
Spanish/German 10-year bond <ES10YT=RR> <DE10YT=RR> spread
narrowing to 191 basis points versus 198 bps on Wednesday. The
equivalent Irish spread <IE10YT=RR> down 9 bps to 457 bps.
"The (Irish) headline of a deficit of 30 percent is somewhat
scary. But ... there is no funding need from the
recapitalisation, so Ireland doesn't have to come to the market
and won't for the rest of the year," Christoph Rieger, a
strategist at Commerzbank in Frankfurt said.
Spain's IBEX 35 index <> was flat and Ireland's share
benchmark <.ISEQ> fell 0.4 percent, while the pan-European
FTSEurofirst 300 <> dipped 0.1 percent.
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For graphic on world asset market performance in Q3 and YTD:
http://graphics.thomsonreuters.com/F/09/GLB_MKTQE.html
For graphic on European debt problem:
http://r.reuters.com/hyb65p
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STRONG Q3 FOR STOCKS
World stocks measured by the MSCI All-Country World Index
<.MIWD00000PUS> were flat, though are up 14 percent this quarter
and heading for their best quarterly performance in a year.
U.S. stock index futures <SPc1> <DJc1> <NDc1> eased around
0.1 percent, indicating a softer opening for Wall Street, ahead
of the final reading of the U.S. second-quarter GDP data and
weekly jobless claims. Federal Reserve Chairman Ben Bernanke's
is also testifying to the Senate's Banking Committee.
Japan's Nikkei average <> slid 2 percent but still
booked its best month since March on expectations that the
central bank will ease policy further and that the yen's rapid
rise could be curbed by more intervention by the authorities.
Oil prices <CLc1> rose 0.7 percent to above $78 a barrel,
while copper <MCU3> advanced 1.4 percent for a nearly 24 percent
rise this quarter, their best three-month performance in a year.
(Additional reporting by George Matlock, William James, Jessica
Mortimer and Blaise Robinson; Graphics by Scott Barber; editing
by Patrick Graham)
