U.S. stocks rebound on rate cut hopes

By Natsuko Waki

LONDON (Reuters) - World stocks rebounded from a 5-1/2 year low on Friday and oil rose above $50 as expectations of further interest rate cuts helped to cushion deepening gloom about the broader economy.

Wall Street was set for a firmer start, one day after the benchmark S&P 500 index fell to its lowest level since 1997 as troubles at Citigroup and U.S. automakers triggered fears about the wider economy.

However, hopes that the world's central banks would cut interest rates further -- with talk that China might lower

borrowing costs later on Friday -- helped world stocks off an earlier 5-1/2 year low.

"The darkest hour is just before dawn," said Justin Urquhart Stewart, director at Seven Investment Management.

"The actions being taken are the key difference between the 1930s and now."

MSCI world equity index was up 0.9 percent after hitting its lowest level since April 2003.

The FTSEurofirst 300 index also rose 0.2 percent. Emerging stocks gained 2.5 percent. U.S. stock futures were up almost 3 percent.