* MSCI world equity index up 0.4 pct at 290.88
* U.S. stocks lose grip, falter at midday
* U.S. dollar hits 1-year low to euro, recovers some
By Al Yoon
NEW YORK, Sept 17 (Reuters) - A measure of global stocks
reached an 11-month high on Thursday as economic reports
supported themes of recovery, pushing currency investors
seeking riskier trades out of U.S. dollars.
But U.S. shares edged lower as some disappointing corporate
profits reined in enthusiasm over an economy still seen as
vulnerable to rising unemployment.
Shares globally are flirting with their highest levels
since the September 2008 collapse of investment bank Lehman
Brothers, illustrating that investors believe the worst of the
credit crisis and U.S. recession has passed.
U.S. government and industry data showed mixed signs of
strength, giving rise to hopes that the nation's employment
outlook may stabilize after the loss of 6.9 million jobs during
the recession. The Standard & Poor's 500 Index has already
rallied 58 percent since March on such confidence, however,
leading investors to turn more cautious.
A steep drop in profit from package shipping giant FedEx
Corp also helped dampen the rally that dominated trading in
Asia and Europe.
FedEx said it saw growing signs of stability in the
"modestly improving global economy."
"The economy is clearly on the mend, but it's not a
straight line," said David Katz, chief investment officer at
Matrix Asset Advisors in New York.
Stocks initially rose after the United States said the
number of workers filing new claims for jobless benefits
unexpectedly fell last week, while starts on new homes
increased to their highest levels since November. These figures
supported a view from Federal Reserve Chairman Ben Bernanke on
Tuesday that the recession was likely over, even if the economy
is not capable of more than sluggish growth.
The Federal Reserve Bank of Philadelphia said business
activity in its region jumped to its highest since June 2007.
European shares reached their highest since early October
for a second straight day, boosted by energy and financial
stocks that would benefit from economies on the mend. The
FTSEurofirst 300 <> index of top European shares closed
higher by 0.51 percent, at 1,011.26.
The broader MSCI world equity index <.MIWD00000PUS> rose
0.4 percent to 290.88, a level also not seen since October,
bringing its gain this year to almost 28 percent.
U.S. indexes shed early gains, with the Dow Jones
industrial average <> down 0.08 percent to 9,783.92. The
Standard & Poor's 500 Index <.SPX> declined 0.31 percent to
1,065.49, and the Nasdaq Composite Index <> fell 0.15
percent, to 2,080.90.
Shares of FedEx <FDX.N> declined 2.2 percent to $76.46. In
Europe, Standard Chartered <STAN.L>, HSBC <HSBA.L>, Royal Bank
of Scotland <RBS.L>, BNP Paribas <BNPP.PA>, Societe Generale
<SOGN.PA> and Credit Agricole <CAGR.PA> were among financial
leading gains, up between 0.5 and 3.8 percent.
U.S. government debt trading signaled investors were
skeptical of the depth of an economic rebound.
The benchmark U.S. 10-year Treasury note <US10YT=RR> yield
declined to 3.39 percent from 3.48 percent late Wednesday as
investors discounted prospects for faster growth, which would
quicken inflation and erode the value of fixed-rate debt.
The dollar declined, but recuperated against a basket of
currencies after hitting a one-year low against the euro in
earlier trading. The ICE Futures dollar index <.DXY>, which hit
a one-year low of 76.010 earlier on Thursday, traded at 76.224,
down just 0.02 percent from Wednesday.
The euro gained 0.2 percent to $1.4736 <EUR=> after
reaching its highest since mid-September 2008.
The U.S. currency has struggled as investors anticipating a
recovery sought other currencies that would maximize profits.
"The trend of dollar selling is getting a little tired,"
said Vassili Serebriakov, a strategist at Wells Fargo in New
York, "but the market is still optimistic on the recovery."
In Asia, an upgrade in Japan's view on the economy, upbeat
Chinese data and bullish comments from a senior Beijing
government economist prompted investors to buy riskier assets.
Chen Dongqi, China's senior government economist, said the
country's economy may regain double-digit annual growth in the
fourth quarter of this year, potentially bringing monetary
policy tightening closer.
Japan's Nikkei stock average <> rose 1.7 percent to
10,443.80, buoyed by exporting companies, after upbeat U.S.
economic data this week boosted hopes of rising demand.
(Additional reporting by Chuck Mikolajczak, Caroline
Valetkevitch and Nick Olivari, Editing by Chizu Nomiyama)
