* MSCI world equity index up 0.5 pct at 296.76
* China, U.S. data underpin risk sentiment
* Oil firmer; yen, government bonds slip
By Natsuko Waki
LONDON, Dec 11 (Reuters) - World stocks extended gains and
oil rebounded on Friday as upbeat data from China and the United
States underscored an economic recovery, weighing on safe-haven
government bonds and the low-yielding yen.
China's industrial output accelerated in November to a
higher-than-expected 19.2 percent from a year earlier, its
fastest pace since June 2007. Imports surged 26.7 percent, their
first rise in 13 months.
On Thursday Wall Street rose after signs of improving trends
in the job market and a decline in U.S. October trade deficit
reassured investors the economy was on a steady growth path.
"Risk is back on. But it's a bit difficult to get too
excited," said Niels Christensen, currency strategist at Nordea
in Copenhagen.
MSCI world equity index <.MIWD00000PUS> rose 0.5 percent,
still off its 14-month high set earlier this month.
The FTSEurofirst 300 index <> bounced 0.7 percent, led
by gains in chemical and basic resource shares.
Emerging stocks <.MSCIEF> gained 0.8 percent. U.S. stock
futures pointed to a firmer open on Wall Street, ahead of
closely-watched data on U.S. retail sales.
U.S. crude oil <CLc1> rose 0.5 percent to $70.90 a barrel.
Bund futures <FGBLc1> fell 28 ticks, erasing gains made
after investors flocked to the perceived safety of German bonds
following a downgrade in Greece's credit rating and a cut in
Spain's rating outlook.
The Greek <GR10YT=RR> and German <EU10YT=RR> 10-year
government bond yield spread narrowed to 206 basis points from
around 230 bps late on Thursday.
French economy minister Christine Lagarde said Greece could
rely on its euro zone partners as it confronts its debt crisis,
adding however they expected Athens to get its public finances
into order.
The dollar <.DXY> fell 0.1 percent against a basket of major
currencies, while the yen fell 0.6 percent to 88.88 per dollar
<JPY=>.
Sterling rose 0.1 percent to $1.6294 <GBP=> after Moody's
said Britain's triple-A rating is under no threat of a downgrade
right now.
The British currency has been under pressure on concerns
about a ballooning domestic fiscal deficit and the prospect of
low interest rates well into next year.
"In reality, any positive end to 2009 and start to 2010
should not blind us to the tremendous downside risks that are
strewn along the path of policy normalisation - both monetary
and fiscal," Bank of New York Mellon said.
"Indeed, with bond markets already suffering jitters in the
face of daunting deficits in the Western world, there is very
little margin for error as central banks and governments go
about this process."
(Additional reporting by Jamie McGeever; Editing by Victoria
Main)
