* Stocks fall on further bank worries, Citi in focus
* Oil climbs after three-day slide
* Dollar up slightly against major currencies
By Jeremy Gaunt, European Investment Correspondent
LONDON, July 18 (Reuters) - The rollercoaster that is world
stock markets hit the dips again on Friday, falling on bank
worries after Merrill Lynch posted a $4.9 billion loss, while
the dollar gained and oil reversed a steep three-day slide.
Markets were also pondering a Wall Street Journal report
that embattled U.S. mortgage giant Freddie Mac <FRE.N> is
considering raising capital by selling as much as $10 billion in
new shares to investors.
After-the-bell in New York overnight, investment bank
Merrill <MER.N> posted a much larger-than-expected $4.89 billion
quarterly loss after writing down soured debt. It also unveiled
plans to sell billions of dollars of assets to shore up capital.
The results fed into investor angst about the continuing
stress on the financial sector from the credit crisis, although
not all results have been as bleak. JP Morgan <JPM.N>, for
example, reported better-than-expected earnings.
The market focus was on the report from global banking giant
Citigroup <C.N> due later in the day.
MSCI's main world stock index <.MIWD00000PUS> was down 0.5
percent for a more than 15 percent loss so far this year. The
pan-European FTSEurofirst 300 <> was also down 0.6
percent.
"The results from Citigroup will be key because it is
probably the most exposed to risky assets among the large
banks," said Thierry Lacraz, strategist at Swiss bank Pictet.
Earlier, Japan's Nikkei stock average <> slipped 0.7
percent for its sixth straight week. It closed down 84.25 points
at 12,803.70. The broader TOPIX <> shed 0.9 percent to
1,252.43.
OIL RECOVERS, DOLLAR SLIPS
Oil prices climbed more than $1.50 a barrel to sit above
$130 as buyers came back into the market after a more than 10
percent slide since Tuesday.
Easing tensions between Iran and the West and worries that
high prices and a weaker U.S. economy will undermine demand had
combined to send oil down $15 in just three days.
U.S. light crude <CLc1> rose $1.70 to $130.99 a barrel,
still well off the record high of $147.27 hit on July 11.
"The pullback is perceived as an opportunity to buy," said
Gerard Burg of Australia National Bank in Melbourne.
On foreign exChange markets, the dollar rose slightly
against the euro <EUR=> to $1.5834 and against the yen <JPY=> to
106.45.
Against a basket of six major currencies <.DXY>, the dollar
was up a quarter of a percent at 72.02.
"There will be a focus on Citigroup later today. There's not
really much happening macro-wise," said Daragh Maher, senior
currency strategist at Calyon.
Euro zone government bonds were generally underpinned by the
falling equity markets.
Ten-year bond yields <EU10YT=RR> were flat at 4.457 percent
while 2-year yields <EU2YT=RR> fell a basis point to 4.366
percent.
(Editing by Ruth Pitchford)
