* World stocks up sharply on G20, jobs data
* Japan gains 1.3 percent, Europe up 1.4 percent
* Two-year euro debt yield hits historic low
* Dollar generally weaker
By Harpreet Bhal
LONDON, Sept 7 (Reuters) - Investors jumped back into
equities on Monday, sending world stocks close to their highest
level for the year, while the dollar weakened against a basket
of currencies as demand for risky assets rose across the board.
U.S. jobs data and a weekend agreement by the G20 to keep
economic stimuli running helped drive risk appetite. The meeting
bolstered the view that interest rates will remain low, sending
two-year euro zone government bond yields to historic lows.
The MSCI's all-country world stock index <.MIWD00000PUS>, a
benchmark for professional investors, rebounded 1 percent after
a rare week of losses, and is only a few points off a year high
reached in late August.
The pan-European FTSEurofirst 300 index <> added 1.4
percent, reversing losses from the previous week, on
expectations of mergers and acquisitions. Japan's Nikkei <>
closed 1.3 percent higher while emerging market equities
<.MSCIEF> were up about the same.
Wall Street was closed for the Labor day holiday.
"The current equity rally has further to go," Morgan Stanley
said in a note. "A growth cycle is starting, we intend to buy
on weakness."
The Group of 20 finance ministers and central bankers said
over the weekend they would not remove economic stimulus until
the global recovery was well entrenched. []
U.S. jobs data on Friday was mixed, but showed
smaller-than-expected job losses.
Notwithstanding Monday's gains, equity markets have been
pulling back somewhat from the sharp rally that began in March.
The world index lost nearly 1.5 percent last week, the first
decline in eight week and only the fifth since the rally began.
Some degree of risk aversion -- and a weaker dollar -- was
evident on the gold market.
Spot gold <XAU=> gained 4 percent last week and is currently
trading around $994 an ounce.
HISTORIC LOWS
Two-year euro zone government bond yields slipped to
historic lows on the view that interest rates will stay low for
longer than some had expected following comments from the
weekend's G20 meeting
The two-year Schatz yield <EU2YT=RR> briefly slipped to a
euro lifetime low of 1.069 percent. It was later at 1.096
percent.
The 10-year yield was at 3.244 percent <EU10YT=RR>.
The dollar and yen were generally weaker with the former
down close to a third of a percent against a basket of major
currencies <.DXY>.
The Australian dollar hit its strongest level against the
dollar in a year as shares gained after a G20 pledge to keep
economic stimulus packages in place.
"The G20 was positive for risk appetite, you can see that
from the yen and dollar's performance. At the same time people
are still a bit cautious as we are approaching the end of this
policy cycle," said Geoffrey Yu, a currency strategist at UBS.
Against the yen, the dollar was flat to slightly weaker at
92.94 yen <JPY=>.
The euro gained 0.4 percent to $1.4344 <EUR=>, near a one
week high but still below August's eight-month high at $1.4448.
(Additional reporting by Emelia Sithole-Matarise and Jeremy
Gaunt; Editing by Andy Bruce)
