GLOBAL MARKETS-World stocks race to 14-mth high after bofa
* MSCI world equity index hits 14-month high of 302.45
* BofA move to repay taxpayer funds boost optimism
* Oil rises; dollar, yen under pressure
LONDON, Dec 3 (Reuters) - World stocks hit a fresh 14-monthhigh on Thursday while oil also rose after Bank of America saidit would repay $45 billion of taxpayer bailout funds in a movewhich injected optimism into the financial sector.
The low-yielding dollar came under pressure, sendingdollar-priced gold to record highs above $1,225 an ounce, asBofA news encouraged investors to chase equities, commoditiesand other risky assets.
Bank of America (BAC.N) has launched the sale of $18.8billion worth of securities, which are expected to be priced onDec. 7, according to a term sheet obtained by Reuters.
Later on Thursday, the European Central Bank is expected toreveal new staff forecasts which would underpin its gradualprocess of phasing out its financial crisis support. The ECB isexpected to keep its key interest rate on hold at 1 percent.
World stocks have erased all the losses suffered after Dubaiannounced a standstill last week on billions of dollars of debtheld by its conglomerate Dubai World, with investors shiftingfocus back to risk-friendly expectations that the world'scentral banks would keep interest rates low for some time.
"Bank of America paying back its debt is positive," saidBernard McAlinden, investment strategist at NCB Stockbrokers.
"(The ECB) may decide to make their liquidity provision lessgenerous, but that's not a signal that they're going to raiseinterest rates soon."MSCI world equity index .MIWD00000PUS rose 0.7 percent,hitting its highest level since late September 2008.
The FTSEurofirst 300 index .FTEU3 rose 0.9 percent, whileemerging stocks .MSCIEF rose 0.7 percent.
The Markit survey showed the euro zone's service sectorexpanded for the third consecutive month in November,underpinning the recovery optimism, although the expansion wasat a slower pace than reported early last week.
"We remain positive on European equities over our investmenthorizon of 12 months," Standard & Poor's European InvestmentPolicy Committee said, adding that its 2010 year-end forecastimplied a 12 percent upside from current levels.
"We believe that the credit markets are more likely capablethan not of absorbing slated government debt issuance, giventhat long-term rates are still low and inflation expectationsare stable."
U.S. crude oil CLc1 rose more than 1 percent to $77.42 abarrel after slipping 2.3 percent a day earlier on alarger-than-expected build in U.S. crude inventories.
German government bond futures FGBLc1, the euro zonebenchmark, fell 44 ticks as markets braced for around 8 billioneuros of debt supply from France and Spain.
The dollar .DXY fell 0.3 percent against a basket of majorcurrencies while the yen fell half a percent to 87.87 per dollarJPY=. (Additional reporting by Brian Gorman; Editing by RuthPitchford) ((natsuko.waki@reuters.com, +44 207 542 6721, ReutersMessaging: natsuko.waki.reuters.com@reuters.net))
Source: Reuters
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