* MSCI world equity index up 0.6 pct at 291.69
* Low-yielding dollar hits one-year low
* Oil, government bonds fall
By Natsuko Waki
LONDON, Sept 17 (Reuters) - Global shares rallied on
Thursday, pushing the benchmark world index to a fresh 11-month
high, while the euro hit a one-year peak against the
low-yielding dollar as investors put back risk trades due to
economic optimism.
An upgrade in Japan's view on the economy, upbeat Chinese
data and bullish comments from a senior Beijing government
economist, plus Wednesday's firm U.S. industrial output data all
helped to prompt investors to pile on risky assets and dump
safer and low-yielding instruments.
The latest leg of the risk rally started earlier this month
when Group of 20 finance chiefs pledged to keep emergency
economic stimulus packages in place.
"Policymakers have made it plain that they are going to do
everything they can to sort out this problem," said Neil Dwane,
European chief investment officer at Allianz Global Investors'
RCM.
"Investors are now realising that interest rates are going
to remain low, bond rates are going to remain low and therefore
you might as well to take risk and at the moment there is only
one place for your to take risk -- it's equities."
MSCI world equity index <.MIWD00000PUS> rose 0.7 percent to
levels not seen since October 2008, bringing its gains this year
to almost 28 percent.
The Bank of Japan upgraded its view on the economy, bringing
it a step closer to phasing out some of its measures to support
corporate funding.
U.S. industrial production rose for a second month in
August, data showed on Wednesday, reinforcing views that the
nation's recession had ended.
Chen Dongqi, China's senior government economist, said the
country's economy may regain double-digit annual growth in the
fourth quarter of this year, potentially bringing policy
tightening closer.
Economic data for industrial output, investment and credit
all surprised on the upside in August.
The FTSEurofirst 300 index <> rose 0.7 percent onb
Thursday while emerging stocks <.MSCIEF> hit a fresh one-year
high.
U.S. crude oil <CLc1> fell 0.1 percent at $72.40 a barrel.
The September bund futures <FGBLc1> fell 36 ticks.
The dollar <.DXY> hit a one-year low against a basket of
major currencies. The euro reached a one-year high of $1.4766
<EUR=> while the New Zealand dollar rose to its highest in more
than a year above $0.7157 <NZD=>.
"Firm stocks suggest the dollar is probably set to slide for
another week," said Hideaki Inoue, chief manager of FX trading
at Mitsubishi UFJ Trust Bank in Tokyo.
(Additional reporting by Dominic Lau; editing by David
Stamp)
