* MSCI world equity index down 0.1 pct at 344.85
* Financial sector results disappoint; eyes on ECB and BoE
* Dollar slips from seven-week high as oil resumes rise
By Natsuko Waki
LONDON, Aug 7 (Reuters) - World stocks slipped on Thursday
as disappointing results from major insurers raised concerns
about the economic impact from the credit crisis ahead of key
interest rate verdicts from the euro zone and Britain.
Oil halted its steep slide from July's record high, which
benefited inflation-sensitive currencies such as the euro
against the dollar.
American International Group <AIG.N>, the world's largest
insurer, posted its third consecutive quarterly net loss of more
than $5 billion on Wednesday as it wrote down bad
mortgage-related investments.
The situation is no better in Europe. The region's biggest
insurer Allianz <ALVG.DE> abandoned its profit targets on
Wednesday, saying new guidance was impossible given financial
market turmoil.
While other results from Barclays <BARC.L> and AXA <AXAF.PA>
were better than many had feared, investors grew nervous that
the damage from the one-year-old credit crisis on financial
firms is far from over.
However, central banks have almost no room to cut interest
rates to boost growth, given inflationary pressures. Both the
European Central Bank and Bank of England are expected to leave
the cost of borrowing unchanged later on Thursday.
"ECB President (Jean-Claude) Trichet will express concerns
about wage growth and the risk of second-round effects," said
Riccardo Barbieri, head of rate strategy at Bank of America.
"However, we believe Mr Trichet will also say or hint that
the ECB has no bias at this stage and acknowledge the worsening
in several euro zone economic indicators."
The FTSEurofirst 300 index <> fell 0.3 percent while
the MSCI main world equity index <.MIWD00000PUS> was down around
0.1 percent.
The dollar slipped from Wednesday's seven-week highs against
a basket of major currencies <.DXY>. Inflation-sensitive
currencies, such as the euro and sterling, rose versus the U.S.
currency as oil steadied.
The September Bund future <FGBLU8> was flat on the day.
EMERGING REVERSAL?
Emerging sovereign spreads <11EMJ> widened 1 basis point
while emerging stocks <.MSCIEF> outperformed their developing
counterparts, holding steady on the day.
U.S. light crude <CLc1> rose 0.4 percent to $119.06 a
barrel, having tumbled from record highs above $147 hit in July.
Gold <XAU=> also edged higher to $883.95 an ounce.
Oil and commodity prices steadied after staging its biggest
monthly fall in at least 10 years in July, based on
Reuters-Jefferies CRB index <.CRB>.
"If commodity prices continue to move lower -- and inflation
risks recede -- the next stage may be a broader decline in rates
paths in the emerging market universe, where tightening has been
ongoing," Goldman Sachs said in a note to clients.
"Trades that focus explicitly on non-U.S. OECD weakness may
provide a better risk-reward. If oil and inflation relaxation
extend, active investors may continue to find themselves
mis-positioned at the sector level."
(Editing by Mike Peacock)
