By Natsuko Waki
Wed Apr 2, 2008 7:54am EDT, YAHOO
LONDON (Reuters) - World stocks leapt to a one-month peak on Wednesday and the dollar rose against the yen as moves by major banks this week to come clean on their financial woes and raise fresh capital relieved investors.
The cost of borrowing very short-term dollar, euro and sterling funds fell for a second day as quarter-end funding pressure faded and after the European Central Bank's move to ease funding strains.
Government bonds edged lower after investors sold safe-haven assets for risky assets at the start of the quarter. Energy and commodity prices recovered from Tuesday's sell-off, providing support for emerging markets and other risky assets.
A $19 billion writedown by UBS (UBSN.VX: Quote, Profile, Research), revelation of a bigger-than-expected writedown at Deutsche Bank (DBKGn.DE: Quote, Profile, Research) and strong demand for Lehman Brothers' (LEH.N: Quote, Profile, Research) share offering aimed at raising fresh capital all helped to boost expectations that the worst of the eight-month-old credit crisis might be over.
"There's a growing sense of optimism in the market, rightly or wrongly, that the worst of the financial crisis is over ... and that's raising the market's risk appetite," said Adam Cole, global head of FX strategy at RBC Capital Markets.
The FTSEurofirst 300 index rose 0.5 percent while MSCI main world equity index rose nearly 1 percent to its highest level since late February.
U.S. stock futures were pointing to a slightly weaker open later on Wall Street, where U.S. stocks posted their biggest one-day rally since March 18 on Tuesday.
OFFICIAL EFFORTS Continued...
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