* MSCI World index has pre-EM selloff peak in sight
* U.S. stocks seen up, Treasuries off 1 basis point
* European shares dip, stemmed by gains in BHP Billiton
* ZEW sentiment index flags weaker Feb morale
* Yen the currency weakling on BoJ largesse
* Dollar, euro both near February highs vs yen
By Simon Jessop
LONDON, Feb 18 World stocks rose on Tuesday to
buck weakness in parts of Europe after a fresh burst of stimulus
from the Bank of Japan boosted the Nikkei and hit the yen.
That trend was set to continue in the U.S. session, with
stock futures there all pointing to small
gains as traders return from a three-day weekend. Ten-year
Treasuries, meanwhile, were down 1 basis point at 2.73 percent.
The largesse from Tokyo, in the form of an expanded loan
programme to Japan's commercial banks, was partly offset
overnight by action to rein in lending in China and hawkish
rate-rise comments in Australia.
The 3.1 percent gain for Japan's Nikkei contrasted
with the rest of Asia and a 0.1 percent dip in
Europe as the FTSEurofirst 300 consolidated after
rising in eight of the last nine sessions.
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 0.4 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 16 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 0.6 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 hold steady 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
$1,312.34 per ounce.
More insight on the U.S. Federal Reserve's current thinking
is likely on Wednesday, when it publishes the minutes of its