* MSCI world equity index up 0.3 pct at 240.21
* Euro higher after upbeat German data
* Oil erases early losses to rise more than 1 pct
By Natsuko Waki
LONDON, July 7 (Reuters) - The euro rose broadly, world
stocks turned higher, and energy and commodity prices rebounded
on Tuesday after upbeat German manufacturing data helped to
inject optimism about a global economic recovery.
Investors sought mining stocks, helping to erase early
losses in European shares. They are also awaiting second-quarter
corporate results, and aluminium producer Alcoa <AA.N> will
start the U.S. earnings season when it reports on Wednesday.
Manufacturing orders in Europe's largest economy rose at the
strongest pace in nearly two years in May, posting the third
consecutive monthly gain. April's reading was also revised up.
"This underscores expectations that we have the worst behind
us. However, we shouldn't celebrate too much," said HSBC
Trinkaus economist Lothar Hessler.
The euro rose to the day's highs of $1.4047 <EUR=> and 86.50
British pence <GBP=> after the German data.
MSCI world equity index <.MIWD00000PUS> was up 0.4 percent
while the FTSEurofirst 300 index <> rose half a percent.
Basic resource stocks <.SXPP> were the best performers of the
day, rising 2.7 percent.
Copper for three-month delivery <MCU3> on the London Metal
Exchange traded at $4,985 a tonne, up from $4,970 on Monday.
U.S. crude oil <CLc1> rose 1.2 percent to $64.79 a barrel.
Laura D'Andrea Tyson, an adviser to President Barack Obama,
said the United States should be planning for a possible second
round of fiscal stimulus to prop up the economy after the $787
billion rescue package launched in February.
EARNINGS FEAST
According to Thomson Reuters data, analysts expect Standard
& Poor's 500 <.SPX> corporate earnings to fall 36 percent from a
year earlier. This compares with a forecast of a decline of 31.1
percent back in April and an increase of 28.5 percent in
October.
Analysts still expect a sharp V-shaped rebound in earnings
growth with an anticipated growth rate of 183.0 percent in the
fourth quarter -- leaving room for a sizeable downgrade if the
economy does not recover as expected.
"The expectations for the fourth quarter of this year are
particularly high ... If these ambitious forecast aren't met,
investors may be disappointed, creating headwinds for equity
markets," Dirk Wiedmann, head of investments at Rothschild
Private Banking & Trust, said in a note to clients.
"That said, liquidity levels are rising and there is still a
large amount of cash on the sidelines as most institutional and
private investors are currently underweight in equities."
Emerging stocks <.MSCIEF> were steady on the day.
The September Bund future <FGBLc1> fell 36 ticks, off a
seven-week peak set in the previous session.
The dollar fell 0.3 percent against a basket of major
currencies while the yen was steady at 95.30 per dollar <JPY=>.
