* MSCI world index down 0.1 percent at 346.42
* World stocks under pressure again, approaches 5-month low
* Euro near 1-week low after Trichet calms rate expectations
* Oil above $145, within 30 cents of record high
By Natsuko Waki
LONDON, July 4 (Reuters) - World stocks slipped back towards
this week's five-month low on Friday as oil prices near record
highs kept inflation concerns alive a day after the European
Central Bank raised interest rates.
The euro failed to benefit much from the ECB's quarter point
rate hike on Thursday and the region's government bonds rose as
President Jean-Claude Trichet said he had no bias on monetary
policy, dousing speculation about aggressive rate hikes this
year.
A less hawkish tone from Trichet, followed by U.S. job data
which came in line with expectations, provided only short-term
solace for equity investors.
"We cannot get any big relief as long as the overall
stagflation fears hang over the market, and the oil price is a
major factor in this. There will be a wave of downward pressure
on equities after any recovery," Gerhard Schwarz, head of global
equity strategy at UniCredit in Munich, Germany.
"The big question on equity markets is: how far will the
derating go, and when will valuations find a bottom as we
consider inflationary pressures not seen in two and a half
decades?"
The FTSEurofirst 300 index <> fell 0.4 percent while
MSCI main world equity index <.MIWD00000PUS> was down 0.1
percent, having hit its lowest since January on Thursday.
EMERGING FALLOUT
Emerging sovereign spreads <11EMJ> tightened 2 basis points
while emerging stocks <.MSCIEF> fell 0.4 percent.
Analysts say emerging markets, especially in Asia, will be
more severely hit by the rising energy costs.
"The monumental energy price increases will be a
`game-changer' for Asia, in our view," said Stephen Jen, head of
global currency research at Morgan Stanley.
"While there is some scope for remedial policy action to
`amortise' this shock, Asia ex-Japan currencies will likely
weaken against the dollar and assets should underperform in the
period ahead."
The dollar was steady on the day, keeping gains against the
euro made after U.S. payrolls data and Trichet's comments. The
euro hit a one-week low of $1.5675 <EUR=>.
The September Bund future <FGBLU8> rose 30 ticks.
U.S. light crude <CLc1> stood at $145.56 a barrel, within 30
cents of Thursday's record high, with investors bracing a rise
to $150 in the coming sessions.
Gold <XAU=> rose to $934.45 an ounce.
(Additional reporting by Sitaraman Shankar, editing by Mike
Peacock)
