Stocks set for first weekly gain in three, euro edges up

London (Nov 24)  World stocks hovered below record highs on Friday, set to reverse two straight weeks of losses while the euro hit its highest levels in six weeks following stronger than expected economic data this week.

The MSCI World Index, which tracks shares in 47 countries, rose 0.1 percent and is set for gains of more than 1 percent this week. Its climb was underpinned by gains in Europe and Asia. The pan-European STOXX 600 index was up almost half a percent by midday in London. Wall Street futures indicated a positive open. Along with surveys this week that showed Europe's services and manufacturing industries outshining the most optimistic forecasts in Reuters polls, the growing prospect of a grand coalition in Germany boosted sentiment around European equities.

Germany's Social Democrats are ready to hold talks with other parties on breaking a political deadlock created by Chancellor Angela Merkel's failure to form a three-way coalition government, a senior member of the centre-left party said. "There's a lot of impetus there to resolve the situation without recourse to another election," Ken Odeluga, market analyst at City Index, said, adding that an easing in the euro's ascent was also supportive of German equities.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url= The euro touched its highest point in six weeks at $1.1875, up 0.1 percent on the day and on track to mark its third consecutive week of gains.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 percent, as Hong Kong shares bucked the softness in mainland Chinese shares to gain 0.6 percent.

Stocks in mainland China dropped to three-month lows after big falls the previous day on concerns about fresh government steps to curb financial risks and rise in Chinese bond yields.

Reuters