* MSCI world equity index up 0.7 pct at 283.74
* Fed seen keeping current supportive policy in place
* Gold hits record high; dollar under pressure
By Natsuko Waki
LONDON, Nov 4 (Reuters) - World stocks rose from the
previous day's four-week low on Wednesday while the dollar
slipped ahead of a policy decision by the Federal Reserve,
expected to affirm its commitment to ultra-low interest rates.
A survey showed the euro zone's dominant service sector
expanded for the second consecutive month and at its fastest
pace in 22 months, adding to encouraging economic signs, though
Germany's expanded at its slowest rate in three months. []
The Fed is expected to pledge to hold benchmark interest
rates exceptionally low for "an extended period" while
acknowledging some positive economic development.
"The Fed is unlikely to offer any hints into the timing of
an exit strategy and eventual rate rises, which may help stocks
to rise and consequently boost (the euro)," said Antje Praefcke,
currency strategist at Commerzbank in Frankfurt.
The MSCI world equity index <.MIWD00000PUS> rose 0.7 percent
while the FTSEurofirst 300 index <> gained 0.9 percent.
Markit's final euro zone services purchasing managers' index
of around 2,000 companies rose in October to 52.6, its highest
reading since December 2007, up from 50.9 in September.
That was revised up from forecasts and a flash reading of
52.3.
Emerging stocks <.MSCIEF> rose 1.6 percent.
M&A BOOST
Tuesday's news that Warren Buffett's Berkshire Hathaway
agreed to buy Burlington Northern Santa Fed Corp <BNI.N> in a
deal that values the railroad company at $34 billion was seen as
a sign corporate merger and acquisition activity is picking up,
given low valuations.
More takeover deals would encourage investors to buy
companies seen as potential targets in aid of benefitting from
the eventual deal. It may also signal buyers are more optimistic
about the economy and financing.
U.S. crude oil <CLc1> rose 0.7 percent to $80.15 a barrel.
Spot gold <XAU=> hit record high of $1,091.60 an ounce, helped
by a weaker dollar and news that the Reserve Bank of India
bought 200 tonnes of gold from the IMF for $6.7 billion.
This fuelled speculation that other governments -- including
China -- may be ready to diversify their reserves even at
near-record gold prices, helping soak up IMF supply that the
fund may otherwise be forced to sell on the open market.
The December bund futures <FGBLc1> fell 43 ticks as riskier
assets advanced.
The dollar <.DXY> fell 0.3 percent against a basket of major
currencies while the euro rose 0.2 percent to $1.4767 <EUR=>.
"Conversely a more hawkish message by the Fed would present
the dollar with some potentially strong tailwinds, and would
make euro/dollar vulnerable to a pullback below $1.46," Lloyds
TSB said in a note to clients.
(Additional reporting by Naomi Tajitsu; editing by Patrick
Graham)
