* MSCI world equity index up 0.5 pct at 247.76
* Index eyes strongest quarterly gain since 1988 launch
* Oil tops $73 on surge in trading volume
By Carolyn Cohn
LONDON, June 30 (Reuters) - The MSCI world equity index
looked set on Tuesday for its best quarterly gain since its 1988
launch and oil was on course for its strongest quarter since
1990, as recovery talk fired up markets in the past three
months.
Investors have taken heart from lower global interest rates
and signs central banks' quantitative easing policies have been
effective in kick-starting economies, and China and other
countries' stimulus packages have boosted demand for raw
materials.
Lower volatility, as measured by the VIX index <.VIX>, is
also suggesting markets are no longer in crisis mode.
"The first half of 2009 is ending on a far more positive
note than it began," said Mitul Kotecha, head of global foreign
exchange strategy at Calyon, in a client note.
"Confidence has improved, data releases especially in Q2
2009 have revealed a much smaller pace of deterioration...risk
appetite is set to improve further in H2 2009 but, as with
economic recovery, the improvement will be gradual and prone to
setbacks."
The world equity index <.MIWD00000PUS> has risen over 22
percent in the past three months, and is up 9 percent on the
year, after suffering its worst quarter on record in the last
three months of 2008.
Risky emerging stocks <.MSCIEF> have put in an even stronger
performance, gaining over 34 percent on the quarter and around
the same amount on the year.
The world index gained 0.4 percent on Tuesday and the
emerging market index edged up 0.16 percent.
The FTSEurofirst 300 index <> was steady on Tuesday,
but at a rise of over 17 percent in the last three months was
eyeing its best quarterly gain since Q4 1999.
"We are still living under a credit crunch and the central
banks have very little choice but to keep interest rates quite
low for some time. That may be one of the major fundamental
reasons why asset markets have a tendency to remain
underpinned," said Luc Van Hecka, chief economist at KBC
Securities in Paris.
"Today we could have some volatility tied to the second
quarter ending."
Oil prices leapt more than 2 percent to an eight-month high
above $73 a barrel <CLc1> before trimming gains, on quarter-end
positioning as oil coasted towards its best quarterly gain in 19
years.
Trading volume in both Brent and U.S. crude oil futures
surged to more than 10 times the norm for the Asian time zone.
The safe haven U.S. dollar was weaker, dropping 0.3 percent
against an index of currencies <.DXY> and down 7 percent on the
quarter.
The pound hit its highest in 8 months above $1.6740 <GBP=>
after Nationwide data showed UK house prices surprisingly rose a
second month in June.
The euro gained 0.2 percent to $1.4106 <EUR=> and the dollar
fell 0.6 percent to 95.57 yen <JPY=>.
Euro zone government bond futures fell 4 ticks to 121.11
<FGBLc1>.
(Additional reporting by Atul Prakash; editing by Chris
Pizzey)
