* World stocks climb, heading for large weekly gain
* Europe shares up 2.5 percent, Japan gains 5 percent
* Wall Street set for hefty gains, bond prices fall
* Swiss franc weakens further after intervention
By Jeremy Gaunt, European Investment Correspondent
LONDON, March 13 (Reuters) - World stocks were on track on
Friday for one of their largest weekly gains in 20 years,
propelled by growing confidence in the recovery of the U.S.
banking system.
Wall Street looked set to open with hefty gains and
government bonds sold off.
The Swiss franc steadied, a day after the Swiss National
Bank knocked it sharply lower by intervening to weaken the
currency to make it more competitive, a move that triggered some
concerns about countries embarking on a currency war.
MSCI's all-country stock index <.MIWD00000PUS>, a benchmark
for global equities, was up 1.7 percent, raising the
week-to-date gain to 8.5 percent.
Such a weekly gain, if sustained, would be eclipsed recently
only by two massive rises in November and December last year.
Catalysts for much of Friday's gain were signs that the U.S.
banking system may be stabilising. Bank of America <BAC.N> said
on Thursday it had been profitable in January and February, and
should be able to ride out the recession without any additional
help from U.S. taxpayers. []
The comments echoed statements by Citigroup <C.N> and
JPMorgan Chase <JPM.N> executives in the two previous trading
sessions.
"The economic situation seems to be better than what people
were saying at the beginning of the year -- a view that has come
about now that it seems that U.S. banks' earnings may not be
atrocious," said Masaru Hamasaki, senior strategist at Toyota
Asset Management in Tokyo.
The pan-European FTSEurofirst 300 <> was up 2.5
percent, while Japan's volatile Nikkei average <> closed up
5.15 percent on the day.
SELLING BONDS
On euro zone debt markets, the Bund future was having its
biggest weekly loss since December 2001, in both nominal and
percentage terms.
"Risk appetite has improved somewhat and so this is negative
for government bond markets," said Bob Maes, fixed income
strategist at KBC in Brussels.
Weaker U.S. Treasuries were also weighing on the
European market.
The 10-year cash Bund yield <EU10YT=RR> jumped 11 basis
points to 3.108 percent. The interest rate-sensitive two-year
Schatz yield <EU2YT=RR> was up 3 basis points at 1.358 percent.
Bond yields move inversely with prices.
The Swiss franc was in focus on currency markets after
Thursday's central bank rate cut and announcement it would buy
foreign currencies.
After the moves the euro rose more than 3 percent and the
dollar more than 2.5 percent against the franc. There was
further firming early on Friday. [].
Both were flat on Friday after some initial additional
gains.
The dollar, meanwhile, was flat against most major
currencies. The euro lost 0.2 percent to $1.2888 <EUR=>.
(Additional reporting by Ian Chua; editing by Stephen Nisbet
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge
Fund Blog click on http://blogs.reuters.com/hedgehub)
