* Global stocks fall 0.1 pct, second day of declines
* Euro zone government bond yields off lows, oil slips
* Yen broadly gains on weakness in equity markets
(Updates prices, adds U.S. outlook, quotes)
By Atul Prakash
LONDON, Aug 27 (Reuters) - World stocks lost ground for a
second straight day on Thursday and the yen broadly gained, with
equity investors avoiding risky assets and preferring to take
profits from a rally to 10-month highs this week.
U.S. stock futures <NDc1><DJc1><SPc1> pointed to a subdued
start on Wall Street.
Asian markets led the decline, with Japan's Nikkei average
<> falling 1.6 percent and Shanghai shares <> down 0.7
percent. The pan-European FTSEurofirst 300 <> fell 0.3
percent, dragged down mainly by beverages and chemical stocks.
The MSCI world stock index <.MIWD00000PUS>, which hit its
highest level since early October on Tuesday, was down 0.1
percent at 275.43 points after falling as low as 275.18, while
emerging markets stocks <.MSCIEF> fell 0.5 percent.
"Whilst the rally hasn't truly run out of steam, it has
slowed down over the past couple of sessions as investors take a
breather," said Brian Myers, analyst at ODL Securities.
"A sense of caution seems to be the overwhelming factor, as
lessons have been learnt from those still tending burnt
fingers," London-based Myers added.
Macroeconomic data continued to support the view that the
global economy was on a recovery path, but investors paused at
the fag end of the European summer holiday season.
Figures showed that German consumer sentiment rose to its
highest level in 15 months heading into September as lower
prices and a stable labour market left consumers more willing to
spend, the GfK market research group said. []
Consumer confidence in Italy rose by more than expected in
August to its highest level since March 2007, British house
prices rose for the fourth month running and at their fastest
monthly rate in 2-1/2 years in August and Australian business
investment surged past all expectations last quarter.
[] [] []
"The trend of the last few weeks looks set to continue, if
not at the same pace," said Lars Kreckel, equity strategist at
Exane BNP Paribas.
"A lot of people are still under-invested in equities and
are looking to push back into them which should ensure shares
won't see any downside ... as long as data stays positive."
A Reuters poll showed 44 U.S., British, continental European
and Japanese fund management companies held an average of 57.1
percent of their portfolio holdings in equities in August,
barely changed from 57.0 percent in July. []
BOND YIELDS OFF LOWS
Ten-year euro zone government bond yields rose, pulling away
from multi-month lows earlier in the session, as thin volumes
made the market behave erratically in the face of inflation and
consumer morale data.
Bund futures had earlier edged to their highest level since
late April, supported by weaker-than-expected currency bloc
money supply data.
"Bunds have been on a yo-yo today on account of the poor
volumes, as have equities and at various times both markets have
been paired rather than trading in opposite directions," said a
trader in London.
The yen rose broadly, hitting its highest level in over a
month against the dollar, as investors turned towards relatively
safer and low-yielding assets such as the Japanese currency.
At one stage, the dollar <JPY=> fell to a low around 93.38
yen, its lowest level since late July, before paring losses.
"The yen is strengthening today on doubts about the view that
China will pull the global economy out of recession," said Lutz
Karpowitz, currency strategist at Commerzbank in Frankfurt.
"Also, Asian equities were in minus territory, which is
supporting the yen."
European credit derivatives indexes edged wider on weaker
stock markets. The investment-grade Markit iTraxx Europe index
<ITEEU5Y=GF> was at 92.5 basis points, according to data from
Markit, 0.5 basis points wider versus late on Wednesday.
Among commodities, U.S. crude oil <CLc1> briefly dipped
below $71 a barrel, well off 10-month highs earlier this week as
swollen crude and distillate inventories in the United States,
the world's largest fuel consumer, weighed on sentiment. It was
last at $71.08 a barrel.
(Additional reporting by Naomi Tajitsu, Ian Chua, George
Matlock, Simon Falush and Dominic Lau; Editing by Jon Boyle and
Andy Bruce)
