* MSCI world equity index down 0.3 pct at 215.10
* Morgan Stanley results prompt sell-off
* Sterling tumbles, bonds weaker after UK budget
By Natsuko Waki
LONDON, April 22 (Reuters) - World stocks slipped on
Wednesday, hit by downbeat results from Morgan Stanley, while
sterling and UK government bonds tumbled after Britain unveiled
a gloomy growth forecast and high government borrowing.
Morgan Stanley fell more than 4 percent in premarket trading
after reporting a net loss of $0.57 per diluted share. Its debt
protection cost in the derivatives market widened 15 basis
points after the result.
Wednesday brings key results from firms including Apple
<AAPL.O> and Boeing <BA.N>.
World stocks have risen more than 25 percent since hitting a
6-year low in March but investors are pausing to assess the
health of the banking sector and other corporates to see if the
recovery in risk assets can be sustained or this is just a
bounce within a bear market.
"This is just typical bear market behaviour; if you have a
new bull market, you need new leadership. If you see things go
up that have been hammered down the most, like financials, it is
a very good chance it is a bear market rally," said Philippe
Gijsels, senior equity strategist at Fortis Bank.
"I am afraid over the next few weeks corporate and economic
newsflow will be weak. On top of all that we are still going to
have to wait five months before we know what impact the stimulus
packages will have on the real economy."
MSCI world equity index <.MIWD00000PUS> was down 0.3
percent, having dipped in and out of positive territory for most
of the session. The FTSEurofirst 300 index <> fell 1.3
percent after Morgan Stanley's results.
In Europe, Swedish home appliances maker Electrolux
<ELUXb.ST> jumped 15 percent after posting a surprise core
profit while the world's third-largest brewer Heineken <HEIN.AS>
fell 4 percent after posting a worse-than-expected drop in beer
volumes.
Pharmaceuticals group Roche <ROG.VX> lost 8 percent after a
late stage trial of cancer drug Avastin showed that it did not
prevent the recurrence of colon cancer in patients who have
undergone surgery.
Emerging stocks <.MSCIEF> were down 0.1 percent.
BUDGET HITS UK ASSETS
Sterling fell more than 1 percent to $1.4506 <GBP=> as the
country's finance minister Alistair Darling said the economy
will shrink by 3.5 percent in 2009, the fastest rate of
contraction since World War Two.
Presenting his budget, Darling also forecast government
borrowing of 175 billion pounds this year, more than 12 percent
of GDP as the credit crisis limits tax revenue and brings higher
welfare spending.
UK government bond futures <FLGM9> also tumbled after the
country's debt management office announced an bond issuance
programme of 220 billion pounds in 2009/10.
"The Chancellor is being more cautious than he has been on
his estimates, highlighting what a perilous state the country's
finances are in and what a desperate state the UK economy is
in," said Henk Potts, strategist, Barclays Wealth.
U.S. crude oil <CLc1> fell 0.3 percent at $48.41 a barrel.
The low-yielding dollar <.DXY> was steady against a basket
of major currencies. The euro hit a one-month low of $1.2886
<EUR=> as concerns rose about the euro zone's economy. The yen
was up 0.9 percent at 97.75 per dollar <JPY=>.
The June bund futures <FGBLc1> were down 10 ticks.
(Additional reporting by Leah Schnurr and Joanne Frearson;
Editing by Toby Chopra)
