* MSCI world equity index unchanged at 345.27
* ECB and BoE leaves interest rates steady; eyes on Trichet
* Dollar slips from seven-week high as oil rises
By Natsuko Waki
LONDON, Aug 7 (Reuters) - World stocks steadied on Thursday
after central banks from the euro zone and Britain met
expectations to leave interest rates on hold while the dollar
slipped from a seven-week high as oil resumed its ascent.
The European Central Bank and Bank of England left interest
rates on hold at 4 percent and 5 percent respectively.
Investors focused on the news conference from ECB President
Jean-Claude Trichet later to seek his views on how the central
bank could balance the effect from slowing growth and rising
price pressures.
Slowing growth could ease inflationary pressures, which
would create some room for central banks to fight the credit
crisis with lower interest rates -- which would support risky
assets like stocks.
"The threat of inflation can diminish, enabling central
banks to resume their activity of cutting interest rates," said
Edward Menashy, chief economist of Charles Stanley.
Riccardo Barbieri, head of rate strategy at Bank of America,
said: "ECB President Trichet will express concerns about wage
growth and the risk of second-round effects."
"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 <> was unchanged on the day
while the MSCI main world equity index <.MIWD00000PUS> was also
steady.
Earnings results from the financial sector were mixed.
Barclays <BARC.L> and AXA <AXAF.PA> gave better-than-expected
results, while American International Group <AIG.N> posted its
third consecutive quarterly net loss of more than $5 billion on
Wednesday.
U.S. stock futures <SPc1> fell 0.4 percent, pointing to a
weaker start on Wall Street later.
The dollar was down 0.3 percent against a basket of major
currencies <.DXY>, after hitting a seven-week high on Wednesday.
Inflation-sensitive currencies, such as the euro and sterling,
rose versus the greenback as oil rose.
The September Bund future <FGBLU8> was up 7 ticks on the
day.
EMERGING REVERSAL?
Emerging sovereign spreads <11EMJ> was unchanged while
emerging stocks <.MSCIEF> outperformed their developing
counterparts, rising 0.2 percent on the day.
U.S. light crude <CLc1> rose 1.7 percent to $120.56 a
barrel, having tumbled from record highs above $147 hit in July.
Gold <XAU=> also edged higher to $884.10 an ounce.
Oil and commodity prices stabilised after staging their
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."
(Additional reporting by Kirsten Donovan; Editing by Ron Askew)
