Economy worries hit stocks

By Jeremy Gaunt, European Investment Correspondent

LONDON (Reuters) - World stocks stumbled in the attempt to put in gains for the third day in a row on Tuesday as Wall Street futures turned down on economic fears.

European stock markets had been in positive territory as investors bet governments would succeed in ending the credit crisis and in controlling the global economic downturn.

But fears about the deteriorating global economy after tech bellwether Texas Instruments TXB.N warned of slowing sales turned things down.

The dollar, meanwhile, hit a 1-1/2 year high against major currencies, including the euro.

Sentiment in Europe and Asia was boosted overnight by comments from U.S. Federal Reserve Chairman Ben Bernanke, who backed government spending as a fresh measure to boost the U.S. economy.

Interbank lending rates were also fixed lower, fuelling a belief that government rescue plans were beginning to free up frozen money markets.

MSCI's all-country world stock index, a broad measure of global stock market performance, was flat to lower after gaining for two days in a row.

Although, close to 12 percent above five year lows hit on October 10, the index remains down 39 percent year-to-date.