* MSCI main world index up 0.8 percent at 341.03
* Wells Fargo, falling oil prices stabilise investor mood
* Focus on more results from key U.S. banks, corporates
* Dollar down on a report SWFs are cutting back exposure
By Natsuko Waki
LONDON, July 17 (Reuters) - World stocks extended gains on
Thursday from a recent 21-month low, helped by tumbling oil
prices and stronger results from a top U.S. bank which raised
expectations for reports from other banks and corporates due
later.
The dollar fell to stand within a cent of this week's record
low versus the euro after a report sovereign wealth funds have
been cutting back on dollar exposure.
Wednesday's forecast-topping results at Wells Fargo <WFC.N>,
the fifth largest U.S. bank and a big mortgage lender, helped
drag financial shares up from their record lows.
Investors are now looking to a series of U.S. corporate
quarterly earnings results later from firms including JP Morgan
<JPN.N>, Merrill Lynch <MER.N>, IBM <IBM.N>, Microsoft <MSFT.O>
and Google <GOOG.O>.
These results will set the tone for equities and risky
assets which have been sold off in recent sessions on concerns
about the financial sector -- which many analysts say would take
a series of extremely strong results to wipe out.
"Even if we get a positive surprise here and there, that
doesn't mean the financial crisis is over. We might get a
technical rebound on the short term, but from a macro
perspective, it's a different story," said Yann Lepape, chief
global macro strategist at Oddo Securities in Paris.
The FTSEurofirst 300 index <> rose 1.9 percent, while
MSCI main world equity index <.MIWD00000PUS> gained 0.9 percent
after hitting the 21-month low earlier this week.
On Wednesday, the KBW Bank index <.BKX> of large banking
companies rose 17.3 percent on Wall Street, its biggest gain in
at least 15 years.
SCALING BACK DOLLAR EXPOSURE?
The dollar was down around 0.2 percent at $1.5858 <EUR=> per
euro, while it lost 0.1 percent against a basket of currencies
<.DXY>.
The Financial Times reported some of the world's largest
sovereign wealth funds are seeking to scale back their exposure
to the U.S. dollar in a sign of global concern about the
currency.
"It's been fairly clear for a while that Middle Eastern
sovereign wealth funds have been scaling back their dollar
exposure, but...that's given people a reason to take a bit of
profit," Russell Jones, head of fixed income and currencies
global research RBC Capital Markets.
However, dollar weakness poses a problem for many oil rich
nations in the Gulf as a falling U.S. currency fans inflation
which these economies have limited means to control because
their currencies are pegged to the greenback.
Emerging sovereign spreads <11EMJ> tightened 3 basis points
while emerging stocks <.MSCIEF> rose 1.6 percent after hitting a
2008 low.
The September Bund future <FGBLU8> fell 30 ticks.
U.S. light crude <CLc1> fell half a percent to $133.96 a
barrel, after falling nearly $15 from last week's record high
above $147 in the past sessions.
Gold <XAU=> fell to $962.70 an ounce.
(Additional reporting by Blaise Robinson and Toni Vorobyova)
