* Stocks extend gains after US emerges from recession
* Withdrawal of stimulus a concern; more US data awaited
* Dollar, oil prices pause
(Changes byline, dateline, updates throughout)
By Sujata Rao
LONDON, Oct 30 (Reuters) - World stocks crept higher on
Friday, extending gains following the United States' jump out of
recession, while the dollar drifted ahead of more U.S. data that
will add fuel to the recovery debate.
While news the world's largest economy had finally emerged
from recession gave markets a shot in the arm on Thursday,
concerns remain over world economic rebound. []
Huge gains in risk assets since March are also making
investors wary and preventing equity and commodity prices from
moving significantly higher.
The MSCI world index <.MIWD00000PUS> inched up 0.3 percent
following a 1.5 percent bounce on Thursday.
Stronger-than-expected U.S. growth conflicted with fears
about the eventual withdrawal of massive stimulus measures in
the United States and elsewhere.
These worries, as well as policy tightening signals from
several central banks, earlier this week pushed stocks to their
worst one-day falls since mid-August.
"It will be more difficult for markets to rally further
now," said Brian McAlinden, investment strategist at NCB
Stockbrokers. "You are not going to get the same positive
surprises in economic news. The U.S. GDP was good news on the
day but markets will remain worried about stimulus withdrawal."
European stocks <> were flat after a 1.8 percent rise
on Thursday, with energy companies taking a hit as oil prices
slipped.
Emerging stocks, hard hit by this week's shakeout, rose 0.7
percent <.MSCIEF> having gained a similar amount on Thursday.
The index has fallen over 4 percent this week as traders booked
profits off this year's stellar 70 percent rally.
Analysts highlighted weak U.S. housing data this week and
the fact that U.S. spending was buoyed by car scrappage schemes
-- now being wound down -- as reasons to give stock investors
pause for thought.
"The overall quality of the (U.S. GDP) expansion was not
great. We also worry that the market is failing to realise how
weak the fourth quarter is set to be," ING Bank told clients.
Markets are now awaiting Friday's University of Michigan
confidence reading and the Chicago Purchasing Managers Index to
see if the optimism generated by the GDP data can be sustained.
Investors are also cautious ahead of next week's central
bank policy meetings in the United States, the euro zone and
Britain, which could provide clues about the pace at which
stimulus measures will be withdrawn.
OIL SLIPS, DOLLAR DRIFTS
Enthusiasm was also dissipating on commodity and oil
markets.
Oil which shot up 3 percent on hopes the U.S. growth numbers
were brightening the outlook for energy demand, slipped 0.2
percent <CLc1> though it remains just off one-year highs of
around 82 per barrel hit earlier this month.
The dollar edged higher against the euro to a 2-1/2 week
high after falling on Thursday when risk appetite returned. But
it fell versus the yen on month-end selling by Japanese firms.
Forex traders also sold back higher-yield currencies like
the Australian dollar -- which surged 2 percent on Thursday --
though these losses may be limited if the upcoming data confirms
the recovery picture.
"Higher-risk currencies are down slightly today, but
yesterday's very positive GDP number has given support to the
risk trade and that should carry over today and into next week,"
said Sverre Holbek, currency strategist at Danske Bank in
Copenhagen.
(Additional reporting by Brian Gorman and Naomi Tajitsu,
editing by Mike Peacock)
