* MSCI World index has pre-EM selloff peak in sight
* European shares dip, stemmed by gains in BHP Billiton
* ZEW sentiment index flags Feb morale dip
* Yen the currency weakling on BoJ largesse
* Dollar, euro both near February highs vs yen
By Simon Jessop
LONDON, Feb 18 World stocks just held on to
gains on Tuesday as weakness in Europe took the shine off a
sharp rise in Tokyo after the Bank of Japan pumped more stimulus
into the economy, hitting the yen.
The largesse, in the form of an expanded loan programme to
Japan's commercial banks, was partly offset by action to rein in
lending in China and hawkish comments on rate rises in
The 3.1 percent gain for Japan's Nikkei contrasted
with the rest of Asia and a 0.4 percent dip in
Europe as the FTSEurofirst 300 consolidated after
rising in eight of the last nine sessions.
U.S. stock futures pointed to a mixed
open after traders return from a three-day weekend.
A weak reading of German investor sentiment - on concerns
about a slowing in U.S. economic momentum and uncertainty around
the emerging markets outlook - gave no reason to recover lost
ground, even though think tank ZEW cautioned against a
too-pessimistic reaction to the data.
"Although uncertainties on the current recovery path remain
elevated, we certainly see fewer risks than six months ago or
so," added Annalisa Piazza, market economist at Newedge Strategy
The concern about some emerging market capital markets has
not, however, stopped the MSCI World index from
grinding back to within touching distance of the high hit prior
to January's emerging market-led selloff.
The index is now just 0.5 percent off that peak, helped by a
0.2 percent gain on Tuesday that was buoyed in turn by
London-listed mining heavyweight BHP Billiton ,
which rose after forecast-beating results.
"I think on a valuation basis stocks still aren't
expensive," said Matt Basi, head of sales trading at CMC
Markets. "There's still money parked on the sidelines waiting to
do a bit of bargain hunting."
Those looking for value in the region continue to find
support from recent stronger than expected French and German
growth data and expectations that the European Central Bank will
act if economic conditions deteriorate markedly.
Weighing that up against the weaker ZEW, German Bund futures
rose 23 ticks on the day.
Greek bond yields, meanwhile, hovered around
their lowest since the country's debt restructuring as
international lenders said they would return to Athens this week
to assess the delivery of economic reforms.
YEN LOSES GROUND
The big loser from the BoJ action and subsequent bank-led
Nikkei rally was the yen, which lost ground against all of its
major currency peers, with the dollar gaining 0.5 percent to
trade just off its February high.
The Japanese action had helped "reverse the recent
dollar/yen bear trend" said Tom Levinson, currency strategist at
ING, adding he thought 102.85/95 yen resistance would hold for
The move also helped the dollar edge higher against a basket
of currencies, while the euro also rose against the yen
to post a new February high.
A run of weak U.S. data - most recently manufacturing output
and the last two major payrolls numbers - had put the dollar
under pressure and led to fresh speculation about the likely
pace at which U.S. monetary stimulus will be withdrawn.
After initially weathering a bout of profit-taking, gold
slid away from its near 3-1/2-month peak to hit a session low of
$1,315.04 per ounce.
More insight on the U.S. Federal Reserve's current thinking
is likely on Wednesday, when it publishes the minutes of its