* Japan shares bounce back; world shares rise too
* Yen slips from near record high against dollar
* Bahrain, Libya concern boosts oil price
By Jeremy Gaunt, European Investment Correspondent
LONDON, March 16 (Reuters) - Japanese stocks rebounded on
Wednesday from a major pummelling that some investors thought
overdone, lifting equities elsewhere and allowing the yen to dip
from a near record high against the dollar.
Brent crude <LCOc1> traded back around $110 a barrel after
Bahraini security forces cracked down on protesters and while
fighting in Libya simmered in the background.
Financial markets were readjusting from a worldwide
battering of risk plays following the earthquake, tsunami and
nuclear disasters that hit Japan, the world's third largest
economy.
MSCI's all-country world stock index <.MIWD00000PUS> fell as
much as 4.5 percent over the past three sessions on the back of
a near 20 percent two-session dive on Japan's Nikkei average
<>.
Wednesday's recovery saw the Nikkei regain 5.7 percent, but
still left it down more than 11 percent for the year.
There was a widespread belief that the post-earthquake
sell-off had gone too far too quickly, but still concern that
the nuclear reactor crisis was unresolved.
"Uncertainty in the Fukushima nuclear power plant is clearly
making market participants very nervous," said Kazuhiro
Takahashi, general manager at Daiwa Securities Capital Markets
in Tokyo.
The MSCI all-country index was up 0.8 percent on the day,
though its year-to-date gains have been wiped out by the
reaction to the disaster.
The FTSEurofirst 300 rose half a percent <>.
"The sell-off is ... presenting some solid buying
opportunities for the longer term investor, although with
repeated bouts of panic selling also hitting the market, the
outlook remains choppy," said Peter Stanhope at IG Markets.
YEN SLIPS
The dollar <JPY=> traded at 80.90 yen, recovering from a
four-month low of 80.60 hit on Tuesday. The Japanese currency
tends to rise during times of stress and has been boosted by
expectations of repatriation of funds into Japan []
"We wouldn't talk about a recovery in dollar/yen yet," said
Lutz Karporwitz, currency strategist at Commerzbank in
Frankfurt.
Speculation over yen-selling intervention by Japanese
authorities to weaken the currency has limited its upside so
far.
The euro <EUR=> slipped 0.2 percent to $1.3975.
On bond markets, the week's flight-to-safety bid and a
two-notch credit rating downgrade to A3 and the threat of more
to come from Moody's mean Portugal is likely to face higher
borrowing costs at a sale of up to 1 billion euros of 12-month
paper.
Portuguese bonds underperformed, with 10-year yields
<PT10YT=TWEB> 5 bps higher at 7.646 percent and the spread over
Bunds widening to 449 bps.
The sale is expected to get done, however, supported by
domestic demand [].
(Additional reporting by Akiko Takeda, Antoni Slodkowski,
Naomi Tajitsu, Kirsten Donovan and Atul Prakash; Editing by John
Stonestreet)
