* Investors eye ECB, BoE meetings
* Stocks gains on positive earnings
* Dollar flat against euro, pound
By Jeremy Gaunt, European Investment Correspondent
LONDON, Aug 6 (Reuters) - The European Central Bank and Bank
of England appeared set on Thursday to keep interest rates
unchanged, prompting equity investors to extend their five-month
rally but keeping currency and bond markets edgy.
The dollar was steady against the euro and Britain's pound.
Both central banks will announce their latest monetary
policy decision later in the day.
While there was little tension in the markets over an actual
rate change, investors are keen to see if they will sound more
optimistic about the economic outlook and whether they will add
more stimulus or not. [] and []
"Events are playing out nicely for the ECB, with the first
signs of a recovery, in combination with low inflation,
justifying its current monetary stance," Capital Economics said
in a note.
"However, there are still several dangers looming, implying
there is little time for self-indulgence."
Such dangers were evident in the U.S. economy on Wednesday
when services sector and private payrolls disappointed.
Stock markets were generally looking past both the data and
the central bank meetings at company earnings. The MSCI
all-country world index <.MIWD00000PUS> was up 0.6 percent for a
nearly 11 percent gain over July and August so far.
Europe's FTSEurofirst 300 <> gained more than 1
percent, driven higher by positive earnings reports. Belgian
banking and insurance group KBC <KBC.BR> returned to net profit
in the second quarter and Commerzbank <CBKG.DE> beat analyst
expectations thanks to lower writedowns for problem assets.
The European benchmark index is up more than 45 percent from
its lifetime low of March 9.
"The 200-day moving averages are turning up, a signal that
it's a bull market," said Bernard McAlinden, investment
strategist at NCB Stockbrokers, in Dublin. "But ... in the near
term, there is vulnerability to some kind of correction, as it
looks stretched."
Japan's Nikkei <> closed up 1.3 percent.
WAITING FOR THE BANKS
The euro and sterling were steady against the dollar,
hovering close to recent multi-month highs as the central bank
announcements approached.
The euro was flat at $1.4405 <EUR=> as was the pound at
$1.6988 <GBP=>.
In particular focus was whether the Bank of England would
extend its quantitative easing programme, essentially the buying
of debt with newly-created cash to pump money into the economy,
or freeze it to give time for the 125 billion pounds injection
to work through.
Bund futures fell to their lowest level in a week. The
10-year Bund yielded <EU10YT=RR> 3.382 percent, up about 7 basis
points.
(Editing by Mike Peacock)
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