World stocks eye fourth week of gains on Fed outlook



* MSCI world index heading for 1.8% weekly rise

* European stocks up 0.35%, S&P futures increase 0.53%

* Brent crude eyeing 3% weekly rise

* German 10-year bond yields above 1%

By Carolyn Cohn and Sam Byford

LONDON/TOKYO Aug 12 (Reuters) - World stocks headed for a fourth straight week of gains on Friday as investors scaled back views on how far U.S. interest rates and inflation can climb, while oil recouped some of the previous week's losses.

A slight easing of inflation readings drove global stocks higher and capped a rising dollar this week, though a string of Fed speakers dampened expectations of the central bank going slow on further policy tightening.

"Inflation seems to have turned and that was positive, the growth stocks are outperforming again," said Matthias Scheiber, global head of portfolio management for multi-asset solutions at Allspring.

"I wouldn't be surprised if we have a good finish into the weekend," he added, though he said investors remained cautious.

MSCI's world stock index .MIWD00000PUS was up 0.1% and was showing a 1.8% rise on the week.

S&P futures ESc1 gained 0.53% after the S&P index .SPX closed down 0.07%.

European stocks .STOXX rose 0.35% and were heading for weekly gains of more than 1%. Britain's FTSE .FTSE climbed 0.56% and was eyeing a near-1% rise on the week.

Investors are focused on further inflation data later on Friday, with the publication of the University of Michigan's preliminary survey of consumers for August.

Odds of a 75 basis points U.S. hike in September were as high as 68% earlier in the week, but are now around 34%, where they were a week ago. FEDWATCH

However, San Francisco Federal Reserve Bank president Mary Daly said on Thursday that while a 50 basis point rate hike next month "makes sense" given economic data, she'd be open to a bigger hike if necessary. The rate is currently in the 2.25%-2.5% range. nL4N2ZO07G

Chicago Fed President Charles Evans said he believed the Fed would likely need to lift its policy rate to 3.25%-3.5% this year and to 3.75%-4% by the end of next year, in line with what Fed Chair Jerome Powell signalled after the Fed's latest meeting in July.

In addition, Minneapolis Fed President Neel Kashkari said he hadn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023.

"There are too many uncertainties to know the path of oil and other CPI prices ahead, but the peak of inflation is clearly behind us," Nikko Asset Management chief global strategist John Vail wrote in a note.

"The key question is how far and how fast it will fall. We believe inflation will be quite sticky and central banks will need to be more hawkish than consensus."

The dollar gained 0.24% against a basket of currencies =USD while the euro EUR= lost 0.26% to $1.0289. Sterling dropped 0.36% against the dollar GBP= to $1.2170 after data showing British GDP fell 0.1% on the quarter.

U.S. 10-year Treasury yields US10YT=RR were trading at 2.888% after hitting a near-three-week high of 2.906%.

Benchmark German 10-year government bond yields DE10YT=RR rose above 1% for the first time in two weeks.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.16%, heading for a weekly gain of 1%.

Hong Kong's Hang Seng index .HSI rose 0.46%, but Chinese blue-chip stocks .CSI300 dipped 0.1%.

Japan's Nikkei .N225 was the major outlier, surging 2.62% to its highest level since January as markets reopened following a national holiday.

Brent crude was headed for a weekly climb of more than 3%, recouping part of last week's 14% tumble, as recession fears eased, though an uncertain demand outlook capped gains.

Brent crude oil futures LCOc1 rose 0.41% to $100.01 a barrel. U.S. West Texas Intermediate crude CLc1 gained 0.18% to $94.52.

Spot gold XAU= was down 0.1% at $1,787 an ounce.



World FX rates YTD Link
Global asset performance Link



Editing by Bradley Perrett


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