GLOBAL MARKETS-Sweden rate cut boosts shares; govt bonds surge

* MSCI world equity index steady on the day, Europe rallies

* Sweden surprises with 175 bps interest rate cut

* Oil near 4-yr low, euro zone gov bonds yields at life lows

By Natsuko Waki

LONDON, Dec 4 (Reuters) - European shares rallied on Thursday after a record Swedish interest rate cut boosted expectations for aggressive moves from the euro zone and UK, while government bonds and the yen surged on economy concerns.

Sweden's central bank cut interest rates by a bigger-than-expected 175 basis points to 2 percent. The European Central Bank is expected to cut rates by as much as 75 bps later and the Bank of England is seen slashing the cost of borrowing by a full percentage point.

"The focus will be on the rate cuts. We're seeing central banks around the world lowering rates," said Achim Matzke, European stock indexes analyst at Commerzbank in Frankfurt.

"It could help find a bottom for stocks, but to say if the real floor is in sight, it's too early for that."

The FTSEurofirst 300 index of leading European shares .FTEU3 rose 1.2 percent, erasing earlier losses.

While actions taken by central banks and governments help the economy, investors are nervous that major economies -- most of them already in recession -- are deteriorating rapidly.

Such concerns have pushed oil, which is sensitive to global growth, below $46 a barrel CLc1 to its lowest in nearly four years. Funds seeking safer investment rushed to government bonds, with euro zone 10-year yield EU10YT=RR falling to its lowest since the introduction of the euro in 1999.

MSCI world equity index .MIWD00000PUS was unchanged on the day. The index is down 47 percent so far this year.

Emerging stocks .MSCIEF fell 0.5 percent.

The Markit iTraxx Crossover index ITEX05Y=GF, made up of 50 mostly junk-related credits, held steady at 995 points, having hit a record level of 1,020 on Wednesday.

U.S. crude oil fell 2.3 percent to $45.61 a barrel, losing more than $100 in the space of just four months.

SLASHING RATES

The Riksbank said in a statement there had been an unexpectedly rapid and clear deterioration in economic activity since October.

"(The rate cut) was really good. This is exactly what they should do. Now they are ahead of the curve," said Mats Kinnwall, economist at Handelsbanken.

The bigger-than-expected Swedish cut boosted expectations the ECB could go for a record 75 bps rate cut or even more.

The Bank of England is expected to cut interest rates by a full percentage point to 2 percent, their lowest level in more than half a century.

Rising prices knocked 10-year euro zone government bond yields to 2.956 percent, while 30-year yields EU30YT=RR also fell to a record low of 3.24 percent. The December Bund future FGBLc1 rose 50 ticks.

The benchmark 10-year U.S. Treasury yield US10YT=RR fell to 2.645 percent, its lowest in more than 50 years.

Demand for safer government bonds accelerated this week after the Federal Reserve signalled it could buy government and agency bonds and the United States was confirmed to have entered recession last December.

The yen hit a 13-year high against sterling of 134.18 GBPJPY=R. Sterling fell to a 6-1/2 year low of $1.4471 GBP=. The dollar rose 0.6 percent .DXY against a basket of currencies. (Additional reporting by Blaise Robinson, editing by Mike Peacock)