* Stocks extend gains as US emerges from recession
* Withdrawal of stimulus a concern; more US data awaited
* Dollar steadies, oil prices pause
(updates prices, adds fresh quotes)
By Sujata Rao
LONDON, Oct 30 (Reuters) - World stocks crept higher on
Friday, marginally extending gains that followed the United
States' emergence from recession while the dollar steadied off
the previous session's losses ahead of data that will add more
fuel to the recovery debate.
While news the world's largest economy had finally emerged
from recession gave markets a shot in the arm on Thursday,
concerns remain over the world economic rebound. []
Huge gains in risk assets since March are also making
investors wary and preventing equity and commodity prices from
moving significantly higher.
The MSCI world index <.MIWD00000PUS> inched up 0.3 percent,
slightly extending gains from their 1.5 percent bounce on
Thursday.
Stronger-than-expected U.S. growth conflicted with fears
about the eventual withdrawal of massive stimulus measures in
the United States and elsewhere.
These worries, as well as policy tightening signals from
several central banks, earlier this week pushed stocks to their
worst one-day falls since mid-August.
"The market is waiting to see if the recovery is durable,"
said Jeremy Stretch, strategist at Rabobank in London.
"The recovery is continuing but there are enough question
marks to keep the market worried," he said citing the comatose
U.S. jobs market.
European stocks <> were flat after a 1.8 percent rise
on Thursday, with energy companies taking a hit as oil prices
slipped but bank shares moving higher.
Emerging stocks, hard hit by this week's shakeout, rose 0.7
percent <.MSCIEF> having gained a similar amount on Thursday.
The index -- up 70 percent year-to-date -- has fallen over 4
percent this week and investors remain reluctant to add
positions without more clarity on the economic outlook.
Analysts highlighted weak U.S. housing data this week and
the fact that U.S. spending was buoyed by car scrappage schemes
-- now being wound down -- as reasons to give stock investors
pause for thought.
Markets are now awaiting Friday's University of Michigan
confidence reading and the Chicago Purchasing Managers Index to
see if the optimism generated by the GDP data can be sustained.
Investors are also cautious ahead of next week's central
bank policy meetings in the United States, the euro zone and
Britain, which could provide clues about the pace at which
stimulus measures will be withdrawn.
"It will be more difficult for markets to rally further
now," said Brian McAlinden, investment strategist at NCB
Stockbrokers. "The U.S. GDP was good news on the day but markets
will remain worried about stimulus withdrawal."
OIL SLIPS, DOLLAR STEADIES
Enthusiasm was also dissipating on commodity and oil
markets.
Oil which shot up 3 percent on hopes the U.S. growth numbers
were brightening the outlook for energy demand, slipped 0.6
percent <CLc1> though it remains not far off one-year highs of
around $82 per barrel hit earlier this month.
The dollar edged higher against the euro to a 2-1/2 week
high after falling on Thursday when risk appetite returned. But
it fell versus the yen on month-end selling by Japanese firms.
Forex traders also sold back higher-yield currencies like
the Australian dollar -- which surged 2 percent on Thursday --
though these losses may be limited if the upcoming data confirms
the recovery picture.
"The FOMC meeting next week will be key... if they take a
more aggressive stance (on withdrawal measures) that would be
positive for the dollar and disruptive for (high-yield) assets,"
said Shahin Vallee, emerging markets strategist at BNP Paribas.
(Additional reporting by Brian Gorman and Naomi Tajitsu)
