Global stocks extend gains; UK data hits pound

By Natsuko Waki

LONDON (Reuters) - World stocks rose on Tuesday towards last week's four-month peak after rallies in Asia and Wall Street, while sterling fell after weak housing and retail sales data reinforced gloom about the UK economy.

A fall in oil prices from Monday's record peak and forecast-beating earnings from French bank Societe Generale (SOGN.PA) brightened investor sentiment, while Chinese shares fell 1.8 percent after Monday's earthquake in southwest China where the death toll has reached nearly 10,000.

Technology shares were under spotlight after news Hewlett-Packard Co (HPQ.N) is in talks to buy technology outsourcing company Electronic Data Systems Corp EDS.N for $12-13 billion.

Since the start of the new quarter in April, investors have grown sanguine that the credit crisis since August is not damaging corporate profits and activity and banks are making progress in cleaning up their balance sheets.

"The market does have a much firmer tone to it. It doesn't want to give up an awful lot of ground," said Mike Lenhoff, chief strategist at Brewin Dolphin.

"The crisis aspect of the credit crisis seems to be now something of the past and we're just soldiering on."

The FTSEurofirst 300 index .FTEU3 rose 0.4 percent while MSCI main world equity index .MIWD00000PUS rose a third percent, approaching last week's four-month peak. Asian shares .MIAPJ0000PUS rose more than 1 percent.

Other analysts say corporate results appeared broadly positive but there could be trouble to come.

"We're tap dancing on fairly thin ice," said Justin Urquhart Stewart, investment director at Seven Investment Management.

"The euro zone runs at a 9-month lag to the United States, and the figures are showing us better times, not reflecting what is going on further ahead."

TROUBLES FOR UK?

Sterling failed to share optimism in equity markets, falling 0.6 percent on the trade weighted index after a survey showed house prices fell in every region of Britain in April with surveyors reporting the widest margin of decline in at least 30 years.

A separate survey showed British retail sales values fell for a second consecutive month in April.

Emerging sovereign spreads tightened 3 basis points while emerging stocks .MSCIEF rose more than 1 percent.

The June Bund future was largely steady on the day.  Continued...