Global stocks rise on optimism as oil slides

By Herbert Lash

NEW YORK (Reuters) - Stocks rallied around the world on Thursday on optimism that interest rate cuts by the U.S. Federal Reserve and other central banks will ease a looming global recession, even as oil prices fell on concerns about slowing demand.

Stocks surged in Asia after rate cuts by the Federal Reserve on Wednesday and by Taiwan and Hong Kong on Thursday. The Federal Reserve also opened four more dollar swap lines to other countries.

Japan and Germany also said they would plough billions of dollars into their economies to help cushion them against any deep recession, while the International Monetary Fund also launched a short-term financing facility for developing countries that have a good economic track record but have seen credit markets dry up.

The monetary policy moves bolstered risk appetite as the price of safe-haven government debt and gold fell, while the U.S. dollar rallied against the euro and the yen, buoyed by demand from U.S. corporations and global fund managers seeking to square their books or rebalance their portfolios by month-end.

MSCI's benchmark world stocks index gained gained 3.69 percent, while its emerging markets equities index rallied nearly 11 percent.

"There's perhaps more room for optimism today that we can get through this than there was perhaps two weeks ago," said Matt Kaufler, a portfolio manager at Clover Capital Management in Rochester, New York.

RALLY DOUBTED

The optimism may not last for long though, considering the euphoria after recent concerted U.S. and European efforts to bolster banks proved short-lived, analysts cautioned.