* MSCI main world index up 1 percent at 341.57
* JP Morgan, falling oil prices stabilise investor mood
* Focus on more results from key U.S. banks, corporates
* Dollar steady after falling on ECB comments, SWF report
(Updates with moves after JP Morgan results)
By Natsuko Waki
LONDON, July 17 (Reuters) - World stocks extended gains on
Thursday from a recent 21-month low after JP Morgan became the
latest bank to report forecast-topping earnings results and oil
prices retreated further.
JP Morgan <JPM.N>, the third-largest U.S. bank, reported
second quarter net income of $0.54 a share, against Reuters
estimates' consensus of $0.44.
This followed Wednesday's unexpectedly strong results at
Wells Fargo <WFC.N>, the fifth largest U.S. bank and a big
mortgage lender, which dragged financial shares up from their
record lows and helped stabilise the dollar.
Investors are now looking to a series of U.S. corporate
quarterly earnings results later from firms including 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 in 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.
"Apart from the financials, corporate results for the second
quarter might not be as bad as expected, but overall we see a
further deterioration of the economic conditions, and corporate
results could really suffer in the third quarter."
The FTSEurofirst 300 index <> extended gains after JP
Morgan results to stand up 2.1 percent on the day.
MSCI main world equity index <.MIWD00000PUS> gained 1
percent after hitting the 21-month low earlier this week.
U.S. stock futures were up around 0.5 percent <SPc1>,
indicating a firmer open on Wall Street.
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.
ECB AND SOVEREIGNS
The dollar was down around 0.2 percent at $1.5858 <EUR=> per
euro, while it steadied against a basket of currencies <.DXY>.
The euro advanced against the dollar after ECB Governing
Council member Nout Wellink said a slower economy would not
reduce inflation, adding that like in the 1970s if no action was
taken, then the economy would experience stagflation.
"Wellink is a reminder... that if you let inflation get out
of hand it's pretty costly to bring it back under control," said
Chris Turner, head of FX strategy at ING.
Also weighing on the dollar earlier, 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.
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 4 basis points
while emerging stocks <.MSCIEF> rose 1.7 percent after hitting a
2008 low.
The September Bund future <FGBLU8> fell 50 ticks.
U.S. light crude <CLc1> fell 0.8 percent to $133.54 a
barrel, after falling nearly $15 from last week's record high
above $147 in the past sessions.
Gold <XAU=> fell to $957.00 an ounce.
(Additional reporting by Blaise Robinson and Toni Vorobyova;
Editing by Ron Askew)
