* World equities <.MSCI00000PUS> rally after U.S. GDP data
* US Q3 GDP beat forecasts slightly, show recession ending
* Dollar <.DXY> down; US T-bond <US10YT=RR> down; oil up
(updates throughout, changes dateline)
By Mike Dolan
LONDON, Oct 29 (Reuters) - World stocks recovered from
three-week lows on Thursday after U.S. gross domestic product
data showed the world's biggest economy emerged from recession
in the third quarter at a slightly faster pace than expected.
The data, showing annualised growth of 3.5 percent in Q3
compared with a forecast for 3.3 percent, reassured investors
who had feared this year's recovery may run out of steam and yet
the pace of growth is unlikely to be enough to prompt tighter
monetary and fiscal policy yet, traders said. []
"This really is extremely encouraging, and better than what
most optimists had expected this morning," said Peter Kenny,
managing director of Knight Equity Markets in Jersey City.
The MSCI world index <.MIWD00000PUS> turned positive after
the data, having rebounded from three-week lows set following
Wednesday's biggest one-day selloff since August.
Wall St equity futures <SPZ9> pointed to a higher open there
later. U.S. 10-year Treasury yields <US10YT=RR> jumped six basis
points. The dollar <.DXY>, which has suffered during the
recovery due to a greater appetite for riskier overseas
investments, fell back.
In Europe, the FTSEurofirst 300 index <> jumped 1.17
percent, having fallen around 0.2 percent earlier.
Emerging stocks <.MSCIEF>, which had suffered heavily from
this week's global markets shakeout and retreat from risk,
halved their early losses to stand down 0.7 percent
U.S. crude oil <CLc1> was up 1.6 percent at $78.63 a barrel.
Despite the initial market reactions, many analysts remained
cautious.
"Suggestions that this figure mark the end of the recession
in the US, although technically correct, ignore the relatively
low quality of the growth registered in this release," said Rob
Carnell, economist at ING. "Such suggestions also ignore the
likely soft fourth quarter that is now in the pipeline. The US
economy is not out of the woods yet."
EASING ANXIETY
Earlier, world stocks fell to three-week lows, following a
sharp fall on Wall Street, as disappointing European corporate
results fanned concerns about the durability of the rebound.
One of the biggest losers was oil major Royal Dutch Shell
<RDSa.L> which fell more than 3 percent after its third quarter
net profits fell 73 percent and Chief Executive Peter Voser
warned of a slow recovery.
Markets are worried that the rally in world stocks -- the
benchmark MSCI world equity index was up as much as 75 percent
this month from March -- has been overdone.
(Additional reporting by Natsuko Waki; editing by Patrick
Graham/Victoria Main)
