* World shares gain 0.2 percent on central bank support
* Dollar eases in wake of underwhelming growth figures
* Week packed with central bank meetings and data
* Disappointing growth outlook weighs on oil
By Richard Hubbard
LONDON, April 29 (Reuters) - World shares gained and the dollar fell on Monday as investors counted on easy money from the U.S. and euro zone central banks to offset the risk of future disappointment over global economic recovery.
Wall Street looked headed for a firmer start as well, buoyed also by the formation of a new government in Italy which ended two months of political uncertainty, with traders looking ahead to a heavy week of corporate earnings and economic data.
“It’s that old word ‘uncertainty’ again. At least a plank of that uncertainty has been removed by the Italian political news,” said Richard Hunter, head of Equities at stockbrokers Hargreaves Lansdown.
MSCI’s world equity index was up 0.2 percent at 365.32 points, having gained 2.3 percent last week, although its moves were affected by market holidays in Japan and China.
The market’s main focus remains firmly on the prospects of an extension of the current loose monetary policies from the Federal Reserve and the European Central Bank this week.
Most analysts expect the recent string of underwhelming U.S. economic data to strengthen the hand of policymakers at the Federal Reserve looking to keep the money taps open, and temper any talk of cutting back the current bond buying programme.
The euro was gaining ground on Monday after some investors began to reconsider the prospect of the European Central Bank cutting interest rates on Thursday.
“Last week it was all go, go go - everyone was factoring in a rate cut,” said Sarah Hewin, senior economist at Standard Chartered Bank. “There’s a bit of a reconsideration now, and a look at the reasons why the ECB may decide just to make no move.”
A Reuters poll of 76 economists last Thursday showed only a narrow majority of 43 expected a 25 basis point cut at the ECB policy meeting, which would take its refinancing rate to a record low of 0.5 percent.
By midday the euro was up 0.4 percent against a generally weaker dollar to $1.3090, marking a small recovery after its 1.3 percent drop against the dollar last week when weak German data increased expectations of an ECB rate cut this week.
The dollar was down against most other major currencies, dropping 0.3 percent to 97.75 yen after disappointing first quarter U.S. data on Friday was seen as increasing the likelihood the Fed would keep injecting cash into the economy.
The policy-setting Federal Open Market Committee will announce whether the bank will maintain its current bond buying at $85 billion a month on Wednesday at 1815 GMT.
Investors have welcomed the formation of a broad coalition government in Italy under new Prime Minister Enrico Letta, two months after inconclusive general elections, though remain cautious over how long it will survive.
The broad FTSE Eurofirst 300 index of top European shares was up 0.15, led higher by Milan’s FTSE MIB which had gained about 1.5 percent.
The resolution of Italy’s political stalemate helped bring its five- and 10-year borrowing costs down to their lowest level since October 2010 at a bond sale on Monday, while yields on 10-year year debt in the secondary market fell 13 basis points to 3.93 percent.
“Italian sovereign debt is benefiting from the twin effects of central bank liquidity support and political stability of sorts,” Nicholas Spiro, managing director of London-based consultancy Spiro Sovereign Strategy, said.
The uncertain outlook for economic growth, especially in the world’s two big oil consumers, the United States and China, kept crude prices under pressure, although gold rose 1 percent as its recovery from recent lows continued.
China is due to release surveys on activity in its giant factory sector later this week.
Brent crude slipped 7 cents to $103.09 a barrel, after making its biggest weekly gain since November last week despite data showing the U.S. economy grew less than expected in the first quarter. U.S. oil was up 35 cents at $92.73 a barrel.
“The disappointing GDP data for the United States has raised concerns about the level of oil demand and led to some profit-taking after recent big gains,” said Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt.
Gold futures, which often provide trading cues to cash gold, hit $1,476 an ounce, a gain of 1.5 percent by midday. Spot gold rose $12 to $1,475.50 an ounce.
The precious metal has enjoyed steady demand from buyers seeking the physical asset since it plunged to a two-year low of $1,321 on April 16, led by investors switching out of exchange-traded funds that hold gold and issue securities against it.