* MSCI world equity index down 0.3 percent at 323.95
* European stocks defy falls in Asia; Wall St seen up
* Yen rises broadly; oil hits 5-month low below $105/bbl
By Natsuko Waki
LONDON, Sept 9 (Reuters) - Europe halted a slide in stocks
and Wall Street was set for a firmer start on Tuesday, keeping
alive some momentum from the bailout of U.S. mortgage firms
Fannie Mae and Freddie Mac.
World stocks posted their biggest gains on Monday since the
rescue of Bear Stearns in March after Washington seized control
of the two mortgage firms, whose losses have weighed on the U.S.
housing market and threatened to damage the financial system.
Optimism faded in Asia, where the benchmark equity index
fell, and caution returned to currency markets where investors
cut back on risk and bought the low-yielding yen and the dollar.
However, European stocks extended gains, helped by lower oil
prices. UK equities rose more than 1 percent after technical
trouble had halted trading on the London Stock Exchange for
several hours on Monday.
Investors view the bailout of the two mortgage firms as
positive, although doubts remain about how it would solve
underlying credit problems faced by many banks and stem the flow
of data pointing to a deep economic slowdown.
"While it is good news for the market ... there are still
ongoing global growth woes," said Bernard McAlinden, investment
strategist at NCB Stockbrokers.
The MSCI main world equity index <.MIWD00000PUS> fell 0.3
percent, having hit a 2-year low last week.
Asian stocks <.MIAP00000PUS> fell 2.1 percent, emerging
stocks <.MSCIEF> lost 1.5 percent while the FTSEurofirst 300
index <> managed to rise 0.8 percent.
U.S. stock futures rose 0.6 percent <SPc1>, pointing to
another higher day on Wall Street.
ECONOMIC SLOWDOWN
UK data showed retail sales down, house prices crumbling and
companies more reluctant to hire staff than at any time in
almost 15 years, adding to growing evidence that Britain is
flirting with recession.
The dollar, boosted in recent weeks by signs of faltering
growth outside the United States, hit a one-year high against
major currencies <.DXY> before trimming gains.
"The large chunk of the dollar's rally has been driven by a
relative growth shift in the global economy, with the U.S.
relatively stable at a soft level while the rest of the world
has been going down," Credit Suisse FX strategist Martin McMahon
said. "If anything, the fact that the U.S. authorities are
prepared to step in ... adds to the feeling that they are doing
more to try and stabilise."
The low-yielding yen rose 0.2 percent to 107.94 per dollar
<JPY=>, a sign of investors avoiding risk.
The December Bund future <FGBLc1> fell 41 ticks as European
stocks gained. Emerging sovereign bond spreads <11EMJ> widened 1
basis points.
U.S. light crude <CLc1> fell 1.4 percent to $104.89 a
barrel, hitting a five-month low, while gold <XAU=> slipped to
$799.70 an ounce.
(Additional reporting by Atul Prakash and Veronica Brown;
editing by David Stamp)
