* MSCI world stocks index up 0.3 percent after huge losses
* Dollar slips after 3-year high against major currencies
* Euro zone bonds weaker
By Jeremy Gaunt, European Investment Correspondent
LONDON, March 3 (Reuters) - World stocks drifted higher on
Tuesday after a thorough beating in the previous session left
most leading equity indexes at multi-year lows.
But while some stability was apparent on European and
emerging stock markets, Japan's Nikkei average <> dipped
close to a low not seen for 26 years.
The dollar weakened against major currencies, although it
remains on an upward path.
MSCI's main world stock index <.MIWD00000PUS> was up 0.3
percent on the day, but only after having tumbled 4.9 percent on
Monday, its worst performance since early December.
"It's just a relief rally after yesterday," said Justin
Urqhuart Stewart, director at Seven Investment Management.
Global stocks have been pummelled this year by a left-right
combination of poor economic news and continuing travails within
banks and the global financial system in general.
The MSCI index is down more than 21 percent on the year so
far and has lost as much as 58 percent of its value since
hitting an all-time high in late 2007.
The pan-European FTSEurofirst 300 <> was up 0.9
percent. It lost more than 5 percent on Monday, a day that also
saw the broad U.S. S&P 500 <.SPX index> tumble nearly 4.7
percent.
In Japan, meanwhile, Tuesday brought more angst for
mainstream equity investors.
The Nikkei ended down 0.7 percent. The benchmark hovered
just short of a 26-year low amid worries about the U.S.
financial system. The broader Topix <> slipped 1.1 percent
to 726.80, its lowest close since December 1983.
Gargantuan losses on world stock markets, however, are
piquing the interest of investors who see value appearing and
the potential for at least a short-term reversal.
"Stocks do appear to be oversold at current levels, meaning
there is a possibility for a near-term and significant rally,"
Bob Doll, chief investment officer for global equities at
BlackRock, said in a note.
But he added: "The downside risks remain troubling."
WAIT AND SEE
The dollar weakened as equity markets recovered and traders
bought the euro and other relatively higher-yielding currencies
after the Reserve Bank of Australia unexpectedly left interest
rates on hold.
But activity was subdued as investors took a wait-and-see
stance, believing that increased worries about the financial
system and fears about the deepening global recession would
quickly curtail any move into riskier assets.
The dollar index <.DXY>, a gauge of its strength against a
basket of six other major currencies, hit a three-year high in
overnight trade as investors sought shelter in the world's most
liquid currency. It was up 0.5 percent on Tuesday.
The euro rose 0.7 percent from late U.S. trade to $1.2669
<EUR=>, recovering losses suffered in the wake of European Union
leaders' rejection of a mass bailout for eastern Europe, which
weighed on the single currency the previous day. []
Euro zone government bond yields pushed higher.
The interest rate-sensitive two-year Schatz yield <EU2YT=RR>
was up 4 basis points at 1.234 percent. It remained within
orbit of a euro lifetime low 1.15 percent struck on Feb. 18.
The 10-year Bund yield <EU10YT=RR> was up 5 basis points at
3.082 percent. Bond yields move inversely with prices.
(Additional reporting by Joanne Frearson and Kirsten Donovan,
editing by Mike Peacock)
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