* Global stocks up for fifth session
* European shares gain 2 pct, Japan 1.8 percent
* Wall Street set for strong start
* Easing fears about U.S. banks behind rally
* Bonds sell off, dollar weaker
By Jeremy Gaunt, European Investment Correspondent
LONDON, March 16 (Reuters) - World stocks climbed strongly
on Monday for a fifth session running, lifted by hopes that the
U.S. economic downturn may be bottoming out as investors sought
to take advantage of cheaper equities.
Reassurances over the health of the U.S. banking industry
have sparked something of a recovery in investors' appetite for
risk and Wall Street looked set to join Asia and Europe with
strong gains at the open.
Executives from Citigroup <C.N>, Bank of America <BAC.N> and
JPMorgan Chase <JPM.N> said last week their banks had been
profitable for the first two months of the year.
Federal Reserve Chairman Ben Bernanke also said on Sunday
that he sees the U.S. economic decline moderating and recovery
beginning in 2010, though he said risks remain that politicians
will lack the will to do everything needed to fix the fractured
financial system.
Global stocks as measured by MSCI <.MIWD00000PUS> rose more
than 1.3 percent, bringing gains to more than 11.5 percent since
hitting a low a week ago.
"The eternal battle between the bulls and the bears will
intensify this week," said Chris Hossain, senior sales manager
at ODL Securities.
"Whilst it is hard to say if we have seen the worst, we
certainly haven't seen a week like last week in a long time."
European shares also rose for a fifth straight session, led
higher by financial stocks.
The pan-European FTSEurofirst 300 <> index of top
European shares was up more than 2 percent. The index, however,
is still down around 14 percent this year after plunging 45
percent in 2008.
Earlier, Japan's Nikkei average <> gained 1.8 percent
to post its highest close in a month, with banks such as
Mitsubishi UFJ Financial Group <8306.T> jumping amid the easing
fears about the health of U.S. lenders.
The benchmark rose 134.87 points to 7,704.15, its highest
finish since Feb. 16. The broader Topix <> climbed 2.4
percent to 741.69.
BONDS FOR SALE
The equity charge undermined demand for government bonds
with June Bund futures <FGBLc1> down 73 ticks, two-year
Schatz yields <EU2YT=RR> rising 5 basis points to 1.381 percent,
and 10-year Bund yielding <EU10YT=RR> 3.127 percent, up 8
basis points.
"At least risk aversion is decreasing and there was no
disappointment on the back of the G20," said Patrick Jacq,
interest rate strategist at BNP Paribas in Paris.
"Clearly, as financial stocks still remain the driving force,
this is helping stock markets to rebound further."
Over the weekend, finance ministers and central bankers from
Group of 20 countries pledged to use their full fiscal and
monetary firepower to combat the economic crisis, but the
decisions taken focused more on funds for the IMF and regulating
hedge funds. []
The dollar fell broadly, reversing earlier gains made in the
Asian session, as stock markets rallied.
The currency market was also looking ahead to policy
meetings by the Federal Reserve and the Bank of Japan later in
the week.
The dollar fell 0.65 percent against a basket of currencies
to 86.687 <.DXY>, while the euro rose 0.8 percent from U.S.
trade on Friday to $1.3022 <EUR=>.
The U.S. currency, however, gained 0.49 percent to 98.43 yen
<JPY=>.
(Additional reporting by Atul Prakash and Ian Chua; editing by
Patrick Graham)
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