* MSCI world index up 0.25 percent at 360.73
* World stocks turn higher after Barclays share issue
* Euro rises after ECB warns of high inflation
* Oil holds above $137 a barrel
By Natsuko Waki
LONDON, June 25 (Reuters) - World stocks rose on Wednesday
after Barclays $8.8 billion share issue boosted other banking
shares, while the dollar steadied before a closely watched
policy decision by the Federal Reserve.
The euro rose broadly after European Central Bank officials
warned about persistently high inflation, while oil prices held
above $137 a barrel -- within a few cents of the record high --
keeping inflation concerns alive.
Britain's No.3 bank Barclays <BARC.L> said it was raising
capital through a discounted share issue in which Qatar
Investment Authority, the country's sovereign wealth fund, and
Japan's Sumitomo MitsuiBanking <8316.T> will be major investors.
Signs that the world's major banks are clearing up their
troubles from the credit crisis and raising new capital come at
a time when the global economy faces the threat of rising prices
from surging oil and commodity prices.
That has cemented market expectations that the Federal
Reserve would keep its benchmark interest rates on hold at 2.0
percent later on Wednesday, ending a string of cuts since last
year to bolster the slowing economy.
However, analysts doubt the Fed would embark on a series of
aggressive interest rate hikes given still soft signs from the
U.S. economy.
"(People are) obviously looking to the statement to see how
hawkish they really are but I still think we are going to see
rates on hold for quite some time in the U.S.," said Elisabeth
Afseth, fixed income analyst at Evolution Securities.
"I don't really see the sort of August hike being ready yet.
I would expect them to be a little bit more balanced than what
some fear."
The FTSEurofirst 300 index <> rose 0.8 percent while
MSCI main world equity index <.MIWD00000PUS> erased early losses
to gain 0.2 percent on the day. U.S. stock futures were up half
a percent <SPc1>, indicating a firmer open on Wall Street later.
The dollar <.DXY> was steady against a basket of six major
currencies.
The euro rose around 0.2 percent against the dollar <EUR=>
and the yen <EURJPY=> after ECB President Jean-Claude Trichet
said inflation in the euro area was likely to remain high for
some time. His comments were echoed by other ECB policymakers.
Investors expect the ECB to hike interest rates by a quarter
point next month to 4.25 percent.
INFLATION LANGUAGE
The Fed concludes its two-day meeting later on Wednesday,
with the focus on what language the central bank chooses to use
to highlight inflation and growth concerns when it releases the
accompanying statement.
"It seems likely the Fed will choose to adopt language that
suggests more attention to the inflation outlook while
maintaining the language highlighting the risks to growth,"
David Rosenberg, North American economist at Merrill Lynch, said
in a note to clients.
"As a result, the statement is likely to be less a
representation of the evolution of the economy than a reminder
that the Fed is balancing risks to both growth and inflation,
supporting its stance that 2 percent is the appropriate level
for the Fed funds rate."
U.S. light crude <CLc1> was steady at above $137 a barrel,
within a few cents of the June record high. Gold <XAU=> was
steady at $888.80 an ounce.
Emerging sovereign spreads <11EMJ> were steady while
emerging stocks <.MSCIEF> rose 0.6 percent. The September Bund
future <FGBLU8> fell a quarter percent.
(Additional reporting by Emelia Sithole-Materise; editing by
Stephen Nisbet)
