* European stocks rise, Wall Street set for gains
* India equities soar on election result
* Dollar up against euro
By Jeremy Gaunt, European Investment Correspondent
LONDON, May 18 (Reuters) - European equities overcame early
weakness to start the week on an up note and Wall Street looked
set for gains on Monday, while emerging markets got a boost from
prospects in India for a stable, pro-economic reform government.
The dollar was flat against major currencies after last's
week four-month low.
India was the bright spot for equity investors with the
benchmark 30-share BSE index <> surging more than 17
percent before trading was halted for the day.
Prime Minister Manmohan Singh's coalition defied predictions
of a tight election result and was only about 11 seats short of
an outright majority following the vote count. []
A strong Indian coalition, free of the pressures from its
former communist partners, has boosted the prospect of reforms to
encourage growth in Asia's third-largest economy.
The FTSEurofirst 300 <> index of top European shares
fell as much as 1.5 percent in early trade but turned around
when Wall Street's open began to look positive. It was up 0.7
percent after losing 3 percent last week.
"One should remain 'overweight' stocks and be buying the
dips," JPMorgan said in a European equity strategy note.
Investors have taken some of the gloss off the global stock
rally that began in March as they demand more concrete evidence
of economic recovery. Japan's Nikkei <> for example fell
2.44 percent on Monday.
But some are not willing to call an end to the rally that
saw global stocks rise for nine weeks before slipping last week.
"We think there is more upside, at least in the short term,
as inventory re-stocking and survey data suggest stronger
activity data ahead," Goldman Sachs said in a note. "After that,
deleveraging and a slow economic recovery is likely to bring a
pause. But long term, valuation points to strong returns."
UNCERTAINTIES
The euro fell, still suffering from data on Friday showing
Europe's recession was worse than earlier thought, but the
dollar was flat against basket of major currencies <.DXY>.
The euro was down 0.2 percent against the dollar to $1.34697
<EUR=>.
The dollar rose 0.7 percent to 95.80 yen <JPY=>, a shade
below a session high around 95.91 yen. In early Monday trade,
the dollar had hit a two-month low of 94.55 yen on trading
platform EBS.
"The world economy is in a very uncertain mode,",
Stockholm-based SEB currency strategist Johan Javeus said.
"Right now it is difficult for the market to choose which leg to
stand on."
In the cash market, 10-year Bunds yielded 3.34 percent
<EU10YT=RR>, 3 basis points less than in late Friday trade while
the two-year Schatz yield <EU2YT=RR> was 2 basis points lower at
1.24 percent.
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