* MSCI world equity index up 1.4 pct, highest since Jan 12
* Many risk trades back on the table, US dollar lower
* Asia scales 6-mth peaks; Taiwan in biggest jump in 19 yrs
* Government bond yields rise, Japan's yen falls; oil firmer
By Mike Dolan
LONDON, April 30 (Reuters) - Global stock markets jumped
more than one percent on Thursday to their highest since early
January as investors bet on a stabilisation of the ailing world
economy and took heart from some upbeat corporate earnings.
Asia stocks outside Japan <.MIAPJ0000PUS> led the way,
scaling six-month peaks and markets such as Taiwan <>
recorded their biggest one-day gain in 19 years.
Both the MSCI world index <.MIWD00000PUS> and its emerging
markets component <.MSCIEF> are on course for 12 percent and 17
pct gains respectively in April -- their biggest one-month gains
in the 20-year history of the indices.
European markets followed suit, with the FTSEurofirst 300
<> index of top European shares up 1.4 percent, adding to
a 1.9 percent gain on Wednesday to hit a 11-week closing high.
Global market sentiment was buoyed after the U.S. Federal
Reserve's latest policy statement on Wednesday said the economic
outlook was improving while it vowed to keep interest rates at
historic lows for longer and retain a super-easy money stance.
"The FOMC (The Federal Open Market Committee) was very
positive, and that's exactly what investors were looking for,"
said Joshua Raymond, strategist at City Index in London.
Positive earnings surprises on Thursday from the likes of
mining group Anglo American Plc <AAL.L>, German truck maker MAN
<MANG.DE>, Chemicals giant BASF <BASF.DE> added to the positive
tone on European bourses on Thursday.
GEAR SHIFT
But the shift in investment gears from super-safe assets
into relatively riskier, higher-yielding assets has been gaining
traction through the second-quarter so far.
"People were so bearish that the burden of proof to surprise
people is relatively low," said Adrian Mowat, emerging market
and Asia equity strategist at JPMorgan Chase in Hong Kong. "As
earnings expectations are revised up with economic activity, the
market goes up with that."
Even though the outbreak of swine flu and fears for a
pandemic briefly stalled the rally on Monday, investors are
already betting the economic fallout from the spread of the
virus will be limited as the mortality rate is contained.
For many investors, the bullish mood reflects a growing
conviction the swathe of emergency fiscal and monetary policies
now in place to stimulate the world economy will now prevent a
deep depression taking hold and that some cyclical recovery will
may well be underway by yearend.
First-quarter U.S. gross domestic product data out on
Wednesday reinforced that view. A record drop in U.S. business
inventories and surprisingly robust consumer spending were
widely seen by economists as positive pointing to a growth
pick-up in the world's largest economy in coming months.
There is a "feeling that the Armageddon story is off, albeit
it at the price of a generational collapse in fiscal prudence,"
Alan Ruskin, economist at RBS said in a note to clients.
"Q1 GDP accelerated the bad news (ie the contraction in
investment and inventory adjustment) -- leading to some upward
revisions going forward."
"Obviously this market could get hit extremely hard by a
swine flu story, but the perception that the negative tail risks
on growth are dissipating will provide some backbone to risk
appetite," said Ruskin.
RISK TRADES
Apart from the surge in equity markets, the rise in risk
appetite could be seen across global prices.
The dollar slid as investors shifted funds into
higher-yielding currencies. The dollar shed 0.5 percent to 84.24
<.DXY>, while the euro climbed 0.4 percent to 1.3310 <EUR=>.
Gold <XAU=> and oil prices <CLc1> both rose. Government
bond, seen as safe-havens in times of stress, fell back.
At 0915 GMT, June German government bund futures <FGBLc1>
were down 72 ticks on the day at 122.36, compared with
Wednesday's settlement close, having earlier touched a session
low of 122.32.
The Australian dollar was up 0.7 percent at $0.7325
<AUD=D4>, adding to hefty gains scored the previous day as
market players chased the relatively higher-yielding currency on
the rally in equities.
(Additional reporting by Eric Burroughs in Hong Kong and Simon
Falush in London. Editing by Toby Chopra)
