GLOBAL MARKETS-Stocks slip after China hike; yields higher

                                
* MSCI world equity index down 0.4 pct at 343.14
                                
 * Shanghai, EM shares lower after China interest rate hike
                                
 * 10-year U.S., UK yields at multi-month peak; oil higher
                                
 
                                
 (Updates prices, adds details)
                                
 By Isabel Coles
                                
 LONDON, Feb 9 (Reuters) - World stocks pulled back from a
29-month high on Wednesday as China's interest rate rise
prompted investors to book profits, while inflation expectations
sent U.S. and UK benchmark bond yields to multi-month highs.
                                
 China raised interest rates on Tuesday for the second time
in just over six weeks, ratcheting up its battle against
inflation.
                                
 Monetary tightening in the world's second-biggest economy,
if aggressive, could potentially put a brake on global growth
and weigh on equities and commodities. But investors remained
confident China's proactive but gradual stance will not derail
the global recovery.
                                
 In the short term, the rate hike gave investors an excuse to
consolidate their positions after the benchmark world index
rallied nearly 4 percent since the start of the year.
                                
 Wall Street looked set to open lower, with U.S. stock
futures <SPc1> down 0.3 percent.
                                
 Investors also had their eye on an address by Federal
Reserve Chairman Ben Bernanke later on Wednesday, when he may
give clues on the outlook for U.S. interest rates.
                                
 "China is turning its focus towards inflation, rather than
(slowing) growth," said Adam Myers, senior currency strategist
at Credit Agricole CIB. "What this means is that growth is
likely to continue."
The MSCI world equity index <.MIWD00000PUS> fell 0.4
percent, having hit a 29-month peak on Tuesday, while the
Thomson Reuters global stock index <.TRXFLDGLPU> was down 0.3
percent.
                                
 The FTSEurofirst 300 index <.FTEU3> was down 0.1 percent.
                                
 Emerging stocks <.MSCIEF> were down one percent while
Shanghai shares <.SSEC> dropped 0.9 percent.
                                
 U.S. crude oil <CLc1> rose 0.5 percent to $87.38 a barrel
while London crude prices <LCOc1> jumped above $100 due to
tighter North Sea supplies.
                                
 Bund futures <FGBLc1> were steady on the day while 10-year
U.S. Treasury yields climbed as high as 3.77 percent <US10YT=RR>
-- their highest since late April -- in the wake of a lacklustre
U.S. bond auction.
                                
 The yield on 10-year British government bonds <GB10YT=RR>
rose as high as 3.915 percent, its highest since May 2010.
                                
 Concerns about inflation are putting upward pressure on
yields in the run-up to the Bank of England's monetary policy
decision on Thursday. Money markets are pricing in a small risk
of a rate rise this week and a full quarter-point hike by May.
                                
 The dollar <.DXY> ticked a touch lower against a basket of
major currencies. 
                                
 The euro <EUR=> erased earlier gains to hold steady on the
day at $1.3624 after sources said Bundesbank chief Axel Weber
will not be a candidate to replace Jean-Claude Trichet as the
European Central Bank president.
                                
 Federal Reserve Chairman Ben Bernanke said last week that
the U.S. economy still needs the Fed's help -- a stance many
traders expect him to repeat when he speaks on Wednesday.
 (Editing by Stephen Nisbet)