(Updates prices, adds Wall Street outlook)
By Jeremy Gaunt, European Investment Correspondent
LONDON, Jan 8 (Reuters) - Investors pushed stocks higher on
Tuesday, seeking to reverse their poor start for the year, but
economic worries remained deeply embedded and safe-haven gold
jumped to another record high.
Oil rose around $1.50 a barrel after a three-day fall,
renewing inflation concerns, while the dollar slipped.
Wall Street nonetheless looked set for a positive start,
despite skittishness that followed weak U.S. data last week --
including a poor jobs report -- that rekindled worries that the
U.S. economy is headed for recession.
Such worries battered stocks over the first few trading days
of the year, knocking as much as 3.7 percent off MSCI's main
world stock index <.MIWD00000PUS> at one point.
Shares were recovering on Tuesday, however, with some
resting their hopes on easier U.S. monetary policy.
"The market is torn between two factors: fears of a U.S.
recession on both the earnings and the macroeconomic fronts, and
hopes that the Fed will cut rates aggressively. The latter
factor could underpin the market," said Franz Wenzel, strategist
at AXA Investment Managers, in Paris.
The FTSEurofirst 300 index <> of top European shares
was up 0.7 percent.
Earlier, Japan's Nikkei <> closed up, but only after
first touching an 18-month low. The benchmark gained 0.19
percent to 14,528.67, eking out a rise of 28.12 points. The
broader TOPIX <.TOPIX> was up by 0.74 percent at 1,403.06.
Reflecting overall fears of economic trouble, meanwhile,
gold hit a fresh record of $876.20 per ounce in European
trading.
"Gold is going to play a more important role for asset
managers than it has in the last couple of years because of
geopolitical worries, because of currency movements, and because
people want to fly to quality," one European trader said.
OIL UP, DOLLAR VULNERABLE
Oil also rebounded. U.S. oil <CLc1> was up $1.59 to $996.68
a barrel, recouping some of its $2.82 drop on Monday, which was
a third day of losses after prices hit the $100 mark for the
first time last week.
The dollar was weaker against a basket of major currencies,
although it gained against the Japanese yen.
The euro <EUR=> was up 0.3 percent at $1.4718 while the
British pound <GBP=> gained 0.4 percent to $1.9765. The dollar
was up 0.5 percent at 109.50 yen <JPY=>.
Many analysts continue to be bearish on the prospects for
the dollar, though they think falls will be more muted than seen
last year.
"In our view, the dollar will resume its downtrend, although
the trend won't be as linear as it had been during the last
year: after having appreciated strongly, most currencies now
show less upside potential than a couple of months ago,"
Commerzbank Corporates & Markets said in a note to clients.
Euro zone government bonds were weaker.
The two-year Schatz yield <EU2YT=RR> was up 3.3 basis points
at 3.809 percent. The 10-year Bund yield <EU10YT=RR> was up 2.6
basis points at 4.143 percent. Debt yields move inversely to
prices.
(Editing by Mike Peacock)
