* Goldman Sachs earnings dampen stock rally
* Wall St set for losses but world stocks near 13-mth highs
* Japan gains 1.8 percent, Europe up 0.3 percent
* Dollar erases losses to stand slightly stronger
By Jeremy Gaunt, European Investment Correspondent
LONDON, Oct 15 (Reuters) - Goldman Sachs dampened buoyant
investor sentiment on Thursday with earnings that failed to meet
the most extreme expectations, reversing gains on world stock
markets and pushing the dollar higher.
Wall Street looked set for a negative start.
The investment bank <GS.N> actually posted relatively
robust, better-than-expected quarterly earnings but disappointed
some by not reaching the wilder forecasts being bandied around
the market.
"There were all sorts of rumours flying around that the
results were going to be even stronger than consensus, so the
initial reaction is that they've slightly disappointed despite
beating estimates significantly," said Rupert Armitage of Shore
Capital Stock Brokers,
Citigroup <C.N> also reported better-than-expected results,
but it was a loss.
World stocks as measured by MSCI <.MIWD00000PUS> slipped
from positive territory but remained close to 13-month highs.
Japan's Nikkei <> closed up 1.8 percent and the
FTSEurofirst 300 <> was flat after rising to a fresh
one-year high.
Bank of America Merrill Lynch said on Wednesday their
monthly survey of fund managers had shown increasing bullishness
but that it had not reached the level yet that risked a sharp
counter swing.
"Equities remain in a sweet spot: fears of a double-dip have
receded, while worries about inflation and monetary tightening
are not imminent enough to prevent an October surge in risk
appetite," Michael Hartnett, the bank's chief global equity
strategist, said in a note. []
DOLLAR REVERSES
The dollar hit a 14-month low against a basket of major
currencies before the Goldman results, but then reversed.
The currency currently suffers when risk appetite rises
because of differing prospects for interest rates.
The euro hit a 14-month high of $1.4967 <EUR=>, according to
Reuters data. It was later at $1.4842.
The dollar index, which tracks the performance of the
greenback versus a basket of six other major currencies, was up
a quarter of a percent after falling to a 14-month low <.DXY>.
Euro zone government bonds lost ground.
Ten-year yields <EU10YT=RR> were up 3 basis points at 3.270
percent and two-year yields <EU2YT=RR> were up 1 basis point at
1.367 percent.
(Additional reporting by David Brett; editing by Patrick
Graham)
(jeremy.gaunt@thomsonreuters.com; +44 207 542 1028; Reuters
Messaging: jeremy.gaunt.reuters.com@reuters.net))
