* World stocks gain 2 percent
* Europe up 3 percent, Japan up 4.4 percent
* G20 and ECB meeting in focus
* Dollar weaker
By Jeremy Gaunt, European Investment Correspondent
LONDON, April 2 (Reuters) - World stocks powered higher on
Thursday as hopes grew that the U.S. economic decline was
reaching a bottom while the euro gained despite expectations of
an interest rate cut from the European Central Bank.
Investors were also closely tracking the meeting of G20
leaders in London, looking for confirmation that governments
will continue to take action to bolster the world economy and
shore up the ailing financial system.
"Market participants are becoming more convinced of a global
recovery and that is causing risk appetite to increase," said
Toru Umemoto, chief FX strategist Japan at Barclays Capital.
MSCI's all-country world stock index, a leading benchmark
for global equities, was up 1.9 percent for a 22 percent gain
since early March.
It was driven higher by strong gains in both Europe and
Asia.
The FTSEurofirst 300 <> index of top European shares
was up 2.6 percent, on track for its third straight day of
gains, helped by better-than-feared U.S. home sales and factory
data.
The index has risen 18.4 percent since hitting a lifetime
low on March 9, but is still down 8.1 percent in 2009.
"We think the (global) policy effort will work," said
Bernard McAlinden, strategist at NCB Stockbrokers in London.
"But there will continue to be volatility in markets."
The ECB is to meet later in the day and is widely expected
to cut interest rates by 50 basis points to 1.0 percent. Focus
is also on whether the bank will announce any unconventional
policy measures.
Earlier, Japan's Nikkei average <> gained 4.4 percent,
with volume jumping to a four-month high.
WEAKER DOLLAR
The dollar fell against a basket of major currencies as
global stock markets rallied.
Trading ranges were tight as markets waited for the ECB,
however.
"If (ECB President Jean-Claude) Trichet mentions any
untraditional measures this could be a negative surprise for the
euro," said Toru Umemoto, chief FX strategist Japan at Barclays
Capital.
The euro was up a quarter percent at $1.3265 <EUR=>, but
still in sight of Monday's two-week low near $1.3100 and chart
support at its 100-day moving average of $1.3137.
The dollar index, a gauge of the greenback's strength
against a basket of key currencies, dropped 0.1 percent to
85.301 <.DXY>.
On euro zone government bond markets, the two-year Schatz,
which is sensitive to shifts in interest rate expectations,
yielded 1.26 percent <EU2YT=RR>, two basis points more than in
late Wednesday trade.
The 10-year Bund yield was three basis points up at 3.021
percent <EU10YT=RR>.
(Additional reporting by Charlotte Cooper in Tokyo, and Brian
Gorman and Veronica Brown in London)
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