(Updates prices, adds details)
* MSCI World steady after scoring record highs for 7 days
* Wall Street set for flat start, European shares fall
* Japanese stocks powered up by stimulus hopes
* Euro edges up against dollar before Thursday ECB meeting
* Aussie slips even as RBA goes ahead with tapering
MILAN, Sept 7 (Reuters) - World stocks held near record
levels on Tuesday supported by bets that the U.S. Federal
Reserve will push back tapering its bond purchases and keep its
expansive policy for the near-term.
Hopes of extra stimulus in Japan and strong China trade data
also provided support, although European stocks retraced ahead
of a key ECB policy meeting on Thursday and Wall Street looked
set for a soft start after the Labor Day holiday weekend.
By 1100 GMT, the MSCI world equity index was
flat after hitting a new record high in Asian hours and
following seven consecutive days of gains to record highs.
Europe's STOXX 600 equity benchmark was down 0.4%
but just below its lifetime peak hit in August and S&P 500
futures were flat near record highs.
"Now that the tapering announcement from the Fed in
September seems unlikely, we should expect 'Goldilocks' markets
to continue to at least October or November," said Masahiko Loo,
portfolio manager at AllianceBernstein.
The latest rally started after Fed Chair Jerome Powell's
dovish speech at the Jackson Hole Symposium in August. It
received a further boost from a surprisingly soft U.S. payrolls
report on Friday.
The U.S. economy created 235,000 jobs in August, the fewest
in seven months as hiring in the leisure and hospitality sectors
stalled, reducing expectations that the Fed will opt for an
early tapering of its monthly bond purchases.
Speeches by a number of U.S. policymakers later this week
will be closely watched for any indication about how the weak
jobs report has impacted the Fed's view.
"Given that before Jackson Hole many FOMC members had come
out in favour of tapering on a tight timetable, we'll see if
they confirm, or align with Powell's more moderate message,"
said Giuseppe Sersale, fund manager at Anthilia.
Japanese shares rallied further on hopes the ruling Liberal
Democratic Party will offer additional economic stimulus and
easily win an upcoming general election after Prime Minister
Yoshihide Suga said he would quit.
Tokyo's Nikkei crossed the 30,000 mark for the fist
time since April, also helped by an announcement on its
reshuffle, and the broader Topix index climbed 1.1% to a
Anthilia's Sersale said investors had a defensive
positioning on Japanese stocks that led to a short squeeze.
"I was positive on Tokyo (stocks) and remain so, but perhaps
at this point it is better to look for a less overbought entry
point," he said.
Mainland Chinese shares extended gains, with the Shanghai
Composite rising 1.5% to its highest since February,
helped by Chinese trade data showing both exports and imports
grew much faster than expected in August.
"The mood is improving on hopes the government will take
measures to support the economy and that the monetary
environment will be kept accommodative," said Wang Shenshen,
senior strategist at Mizuho Securities.
A rout in bonds and shares of China Evergrande Group
deepened on Tuesday after new credit downgrades on the
country's No. 2 developer.
In the currency market, the euro rose 0.06% to $1.1876
, a tad below Friday's one-month peak but still
supported ahead of the ECB's policy meeting.
The ECB is seen debating a cut in stimulus, with analysts
expecting purchases under its Pandemic Emergency Purchase
Programme (PEPP) falling possibly as low as 60 billion euros a
month from the current 80 billion euros.
ING strategist Chris Turner said Friday's soft U.S. jobs
report and dovish comments last month by Powell have taken "some
of the sting out of the dollars upside".
"Even the unloved EUR has found a few friends over recent
weeks as hawks on the ECB demand a reassessment of pandemic
support levels," he noted.
Germany's 10-year yield rose to its highest
The Australian dollar briefly rose after the central bank
went ahead with its planned tapering of bond purchases, but
quickly gave up those gains after the bank reiterated its need
to see sustainably higher inflation to raise interest rates.
The Aussie was last 0.5% lower at $0.7403, off its
1-1/2-month high set on Friday.
Oil prices fell after Saudi Arabia's sharp cuts to crude
contract prices for Asia revived concerns over slower demand.
Brent crude futures fell 0.6% to $71.8 per barrel,
while U.S. crude futures declined 1.4% to $68.3.
(Reporting by Danilo Masoni in Milan and Hideyuki Sano in
Tokyo. Editing by Jane Merriman)