* MSCI world equity index up nearly 1 percent
* Stocks, euro gain as Ireland seen close to deal on aid
* Commodities also higher; but rallies may be short-lived
By Jessica Mortimer
LONDON, Nov 18 (Reuters) - Global stocks rebounded on
Thursday, while the euro recovered ground against the dollar on
optimism that Ireland may soon see a solution to the debt
problems which have recently dogged financial market sentiment.
Uncertainty about the Irish crisis ebbed after Dublin agreed
to work with a European Union-IMF mission on steps to shore up
its shattered banking sector, sending the euro up as much as 1
percent against the dollar. [] []
But analysts were sceptical any rebound in risk appetite
would be sustained, with fiscal problems in Ireland and other
peripheral euro zone countries such as Portugal still severe and
many investors inclined to cut risk exposure before year-end.
"It's absolutely vital for the authorities to take proactive
steps in order to try to resolve this crisis as soon as
possible. The market should see some relief in relation to
that," said Henk Potts, equity strategist at Barclays Wealth.
The MSCI world equity index <.MIWD00000PUS> was up nearly 1
percent after touching a one-month low the previous day.
European shares <> rose 1.2 percent, with automakers
surging after General Motors <GM.UL> pulled off the biggest
initial public offering in U.S. history [], and
U.S. futures <SPc1> <DJc1> pointed to a strong Wall Street open.
The gains came after Japan's Nikkei <> jumped more than
2 percent to close above 10,000 for the first time since late
June, while China shares <> also rose. Emerging stocks
<.MSCIEF> were up 1.3 percent.
The euro <EUR=> rose 1 percent against the dollar to
$1.3624. The dollar <.DXY> fell 0.8 percent against a basket of
currencies.
The dollar was also softer after subdued U.S. inflation data
reinforced the Federal Reserve's argument for injecting extra
stimulus into the economy via quantitative easing.
[]
German bund futures <FGBLc1> fell 77 ticks to 127.68, while
Irish bond yields fell, narrowing the spread over their German
counterparts. The cost of insuring against default on Irish,
Portuguese and Greek debt also dipped. []
REBOUND MAY BE SHORT-LIVED
But analysts were unconvinced the rally in the euro and
equities would last.
"We view this as a short-term speculative rally in the euro,
driven by weaker U.S. CPI and some optimism for Ireland as the
IMF and EU arrive in Dublin for talks," said Manuel Oliveri,
currency analyst at UBS in Zurich.
Concerns Chinese economic growth may slow if the country
tightens monetary policy to dampen inflation may also return to
pressure equity markets, commodities and riskier currencies,
with the Australian dollar <AUD=> particularly vulnerable.
Commodity prices rebounded, with U.S. crude oil <CLc1>
rising close to $82 per barrel and retracing part of a
four-session drop, while prices of copper <CMCU3> rose around
1.5 percent and gold <XAU=> around 1.6 percent.
For now, remarks by an academic advisor to the People's Bank
of China, Zhou Qiren, helped temper some of the speculation
about a rise in interest rates as he said China should not rely
solely on rate hikes to curb inflation. []
(Additional reporting by Atul Prakash and Neal Armstrong;
Editing by Toby Chopra)
