By Natsuko Waki
LONDON, April 17 (Reuters) - World stocks rose to a one-week
high on Thursday after better-than-expected corporate earnings
announcements reassured investors that companies around the
world are holding up despite the credit crisis.
The dollar fell towards Wednesday's record low against the
euro <EUR=> near $1.60, with recent weakness in the U.S.
currency helping to drive up oil prices to new record highs
above $115 a barrel.
Intel <INTC.O>'s solid results on Wednesday added to a list
of positive surprises in first-quarter corporate earnings this
week, feeding optimism that tighter lending and credit
conditions are not affecting the economy as much as many had
feared.
Results from the banking sector -- the epicentre of the
eight-month-old credit crisis -- showed financial firms are
scrubbing their books clean to deal with problems.
"What the market is most sensitive to in this earnings cycle
is any hint, any sign that we're past the worst for the
financial sector. Even more so, the concern for the rest of the
market is the degree to which earnings are holding up," said
Bernard McAlinden, strategist at NCB Stockbrokers in Dublin.
The FTSEurofirst 300 index <> rose 0.4 percent while
MSCI main world equity index <.MIWD00000PUS> rose 0.3 percent to
a one-week high.
The dollar fell 0.1 percent at $1.5963 per euro after
hitting all-time lows of $1.5977 on Wednesday.
LIBOR STORM
Daily fixing of interbank reference rates in London due just
before 1100 GMT <LIBOR> is set to attract attention as concerns
about the credibility of the rates are affecting some interest
rate markets.
The spread on two-year U.S. interest rate swaps widened
sharply on Wednesday to their widest level in about five weeks
as a result of these concerns.
In recent months, market participants have questioned the
validity of the LIBOR rates, at which banks offer to lend
unsecured funds to each other and which are used for setting
prices of a wide range of financial instruments.
Critics say LIBOR rates come from a small group of banks and
do not accurately reflect the rates at which banks are willing
to lend to each other, especially in times of stress. The
British Bankers Association said it had brought forward a review
of its setting process.
Since the credit crisis broke in August, a gap between LIBOR
rates and Overnight Index Swaps -- a short-term benchmark rate
for secured funds -- has widened to more than 100 basis points.
European credit spreads improved, with the iTraxx Crossover
index <ITCRS5EA=GFI> tightening 10 basis points to 496 bps.
Emerging sovereign spreads <11EMJ> were steady while
emerging stocks <.MSCIEF> were up 0.7 percent.
The June Bund future <FGBLM8> was steady on the day.
U.S. light crude <CLc1> had risen as high as $115.21 a
barrel before trimming gains to stand steady on the day.
The dollar's weakness and a fall in U.S. gasoline stockpiles
just weeks ahead of the summer driving season have attracted
fresh fund buying.
Gold <XAU=> edged higher to $944.50 an ounce.
(Additional reporting by Amanda Cooper; Editing by Ruth
Pitchford)
