* MSCI world stocks index up 0.05 percent at 345.56
* Oil off record high but inflation concerns persist
* Dollar hits one-week high with focus on G8
By Natsuko Waki
LONDON, July 7 (Reuters) - World stocks held just above last
week's five-month low on Monday as a fall in oil prices from the
recent record high did little to calm concerns about rising
inflation and slowing growth.
Investors kept an eye on a three-day meeting of leaders of
the Group of Eight rich countries in northern Japan to see if
they can send a message strong enough to reverse the surge in
oil prices and the dollar's long-term slide.
Mounting expectations the European Central Bank will refrain
from another interest rate hike after last week's well-flagged
quarter point move to 4.25 percent also undermined the euro,
which fell to a one-week low versus the dollar.
Banks were the major underperformers in Europe, highlighting
persistent concerns over their health almost a year into the
credit crisis. Wall Street was set for a weaker start after the
Dow index fell more than 20 percent last week from its peaks,
signalling the start of a bear market.
"The credit crisis is being worked through but isn't over,"
said Andrew Bell, head of research at Rensburg Sheppards.
"And you've got an economic downturn which is being given an
extra twist from the (high) oil price, so there are earnings
downgrades on the way and it's much easier to come up with a
negative story on equities in the near term than a positive
one."
MSCI main world equity index <.MIWD00000PUS> was steady on
the day, holding not far off last week's five-month low.
The FTSEurofirst 300 index <> rose 0.2 percent, having
spent much of an early session straying in and out of positive
territory. The index is still down more than 20 percent this
year. U.S. stock futures were down 0.1 percent <SPc1>.
The September Bund future <FGBLU8> rose 40 ticks, pushing
the yield lower as investors scaled back bets on aggressive euro
zone interest rate hikes.
DOLLAR UP AS G8 MEETS
The dollar <.DXY> rose 0.4 percent versus a basket of major
currencies, extending last Friday's gains after last week's key
U.S. employment data was not as bad as some had feared.
"If at all, comments from the G8 should be a bit dollar
supportive as the focus of the market is very much on energy
prices and the impact on inflation," Michael Klawitter, FX
strategist, Dresdner Kleinwort, Frankfurt.
"A stable dollar would be one of the preconditions to
stabilise the oil price (and) there is some expectation that the
statement ... should hint at least at some general agreement
that the dollar should not be allowed to weaken further."
U.S. light crude <CLc1> fell 1.7 percent to $142.81 a
barrel, having surged past $145 last week to record highs.
Gold <XAU=> fell to $920.60 an ounce, pressured by a
stronger dollar.
Emerging sovereign spreads <11EMJ> were steady while
emerging stocks <.MSCIEF> rose 0.7 percent.
(Additional reporting by Rebekah Curtis, Toni Vorobyova and Ian
Chua; Editing by Ruth Pitchford)
