* Global stocks rise, up near 6 percent for week
* Euro weakens on concerns over impact of fiscal austerity
By Jeremy Gaunt, European Investment Correspondent
LONDON, May 13 (Reuters) - A stock rally spurred by last
weekend's EU rescue plan continued on Thursday with world shares
rising to one-week highs and emerging equities up almost one
percent.
The euro, however, pared some gains, trading just off recent
lows against the dollar against a backdrop of expectations for
weak euro zone growth.
The Ascension Day holiday in continental Europe stripped
some volume, but major markets were open.
World stocks <.MIWD00000PUS> have risen close to 6 percent
this week following the weekend's 750 billion euro agreement by
the European Union and International Monetary Fund to stave off
a sovereign debt crisis.
They were up around 0.3 percent on Thursday while emerging
markets <.MSCIEF> gained 0.8 percent.
The rescue plan has not solved Europe's debt problems but it
has put a floor under investors' worst fears of a new financial
meltdown and allowed for some pick-up in risk appetite, with
credit spreads tightening.
Investors have also been able to focus more on fundamentals
such as the state of the economy and corporate earnings rather
than reacting to fears about Greece and other EU peripheral
economies.
"Economics has come back to the forefront as a calmer market
sentiment has been restored," Brown Brothers Harriman said in a
note.
The pan-European FTSEurofirst 300 <> was up half a
percent, having risen more than 8 percent this week, essentially
regaining last week's losses.
U.S. stocks were also poised to open firmer with S&P 500 and
Nasdaq futures <SPc1> <NDc1> up 2.25 to 2.5 points. Dow Jones
Industrial Average futures <DJc1> were marginally weaker.
Traders were focusing on a recent spate of soothing company
earnings, some of which were initially all but ignored in the
fears about a spreading sovereign debt crisis.
"The results that we have been seeing from companies have
been very positive and are providing a driving force to equity
markets," said Henk Potts, equity strategist at Barclays Wealth.
"They (results) exceeded market expectations over the course
of the past three months and analysts have been predicting a far
more confident outlook for the rest of this year."
Japan's Nikkei <> closed up 2.18 percent.
IT'S THE ECONOMY
There was no bullishness when it came to the euro, which has
been battered by the sovereign debt crisis and concerns for the
stability of the currency bloc itself.
The single currency fell to a one-week low, weighed down by
worries over how looming fiscal tightening requirements in the
euro zone will impact growth and second, whether the weak
members in the bloc will be able to make necessary budget cuts.
Against the dollar, the euro traded down to $1.2580, down
0.2 percent <EUR=>, not far from last week's 14-month low. It
fell 0.5 percent against the yen <EURJPY=> and touched a record
low against the Swiss franc <EURCHF=>.
Investors are fretting that the euro zone's tentative
recovery -- quarterly growth was 0.2 percent in January-March
-- will be hurt by the need for countries to cut spending to
reduce their bloated deficits.
"Fiscal tightening in the euro zone is going to be
broad-based and this is negative for the euro," said Ian
Stannard, senior currency strategist at BNP Paribas.
Portuguese leaders agreed tough new austerity measures on
Thursday [] following on the heels of Spain, which
on Wednesday said it would slash civil service pay by 5 percent
this year, freeze it in 2011, cut investment spending and
pensions and axe 13,000 public sector jobs in a drive to meet EU
deficit targets.
Bund futures eased as demand for safe havens was tempered.
Gold, however, was in demand at near record prices around
$1,250 an ounce as traders considered the inflationary impact of
the rescue plan.
(Additional reporting by Sujata Rao, Tricia Wright, Neal
Armstrong; Editing by Susan Fenton)
