* Equities climb on U.S. economy's improving prospects
* Japanese and European stocks star
* Dollar gains, Wall Street set to open higher
By Jeremy Gaunt, European Investment Correspondent
LONDON, Jan 6 (Reuters) - Developed market stocks climbed on
Thursday on hopes for renewed U.S. economic growth, while
emerging markets slipped on concerns about food prices.
Wall Street looked set to open higher and the dollar gained.
The key driver was Wednesday's ADP Employer Services report
on Wednesday showing U.S. private employers added 297,000 jobs
in December, a figure that was nearly three times what
economists had forecast and the biggest jump on record for ADP,
which has data going back to 2000.
Jobs are often a lagging indicator of economic health and an
improvement can show that recovery is becoming more sustainable.
The ADP numbers raised expectations for Friday's non-farm
payrolls figures -- traditionally the month's major release.
"The data that we have seen up to November has been pretty
solid but one thing that has been lagging is the employment
market in the U.S. and there is a feeling that to really
underpin the recovery, the job market needs to turnaround," said
Giles Watts, head of equities at City Index.
World stocks as measured by MSCI <.MIWD00000PUS> were up 0.3
percent, mainly on the back of gains in Japan and Europe.
Emerging markets stocks <.MSCIEF> were down 0.2 percent.
Food prices rose to a record high last month, the United
Nations' food agency said this week. Emerging markets are
traditionally more susceptible to food price inflation.
Developed markets were bullish. The pan-European
FTSEurofirst 300 <> was up 0.9 percent for a more than 2.7
percent rise in the very short year-to-date.
Euro zone economic sentiment jumped in December, mainly
thanks to a sharp increase in optimism in industry and the
retail sector, but inflation expectations also surged.
Japan's Nikkei <.N22%> stormed to an eight-month closing
high, up 1.4 percent for a nearly 3 percent gain in three
sessions.
DOLLAR STEADY
The dollar was higher, following a surge in the previous
session.
"The market expects a significantly strong figure for
Friday's payrolls, but they could be overestimating. So there is
scope for disappointment," said Lee Hardman, currency economist
at Bank of Tokyo-Mitsubishi UFJ.
The dollar index, which measures the greenback's value
against a basket of major currencies, was 0.2 percent higher at
80.42 <.DXY>, a sharp turnaround from last week's 78.775 trough.
But investors were reluctant to chase the dollar much higher
ahead of Friday's payrolls numbers.
The euro eased 0.3 percent to $1.3100 <EUR=>.
Currency markets digested moves by Brazil's central bank to
curb speculation by imposing a reserve requirement on banks'
short dollar positions. The local real, which has risen sharply
along with many emerging market currencies, fell on the news.
Core euro zone government debt was flat.
Spanish newspaper El Pais reported that China's Vice Premier
Li Keqiang signalled at a meeting during a visit to Madrid that
his country is willing to buy about 6 billion euros of Spanish
public debt.
(Additional reporting by Tamawa Desai and Harpreet Bhal;
Editing by John Stonestreet)
