World stocks soar on recovery hopes

By Jeremy Gaunt, European Investment Correspondent

LONDON (Reuters) - World stocks powered higher on Thursday as G20 leaders prepared to boost the International Monetary Fund's finances and more signs appeared that the world economy could be recovering.

The European Central Bank was also set to cut interest rates in another move to stimulate growth.

"Market participants are becoming more convinced of a global recovery and that is causing risk appetite to increase," said Toru Umemoto, chief FX strategist Japan at Barclays Capital.

MSCI's all-country world stock index, a leading benchmark for global equities, was up 2.3 percent for a roughly 22 percent gain since early March.

It was being driven higher by strong gains in Europe that followed a jump in Asia. Wall Street also looked set for a surge at the open.

The FTSEurofirst 300 .FTEU3 index of top European shares was up 3.2 percent, on track for its third straight day of gains, helped by better-than-feared U.S. home sales and factory data.

New car registrations in Germany, Europe's biggest auto market, also leapt 40 percent in March as government incentives kicked in.

Earlier, Japan's Nikkei average .N225 gained 4.4 percent, with volume jumping to a four-month high.

G20 leaders looked set to triple the war chest of the International Monetary Fund to fight the economic crisis, according to sources at the summit.

They said the latest draft summit communique provided for a $500 billion boost to the IMF's resources, raising to $750 billion the funds it can make available to countries worst hit by the global crisis.

The ECB was also widely expected to cut interest rates by 50 basis points to 1.0 percent. Focus is also on whether the bank will announce any unconventional policy measures.

WEAKER DOLLAR

The dollar extended losses against a basket of currencies, allowing the euro to rise while the yen approached the 100 mark after the likely IMF funding move was known.

The dollar index .DXY fell 0.6 percent to 84.919 while the euro extended gains, rising around 0.9 percent to $1.3350.

Yen weakness pushed the dollar up to 99.90 yen, its highest since last November, before recovering a bit. Continued...