* MSCI world equity index up 0.2 pct at 287.35
* Strong US, China PMI still providing support
* Euro holds gains after ECB; oil down
By Natsuko Waki
LONDON, Sept 2 (Reuters) - World stocks hit a two-week high
on Thursday as optimism from strong U.S. and Chinese
manufacturing data extended into a second day while the euro
gained, drawing support from solid French and Spanish bond
auctions.
Asian stocks also hit a two-week high and Wall Street was
set for a slightly firmer open. U.S. stocks posted their best
day in eight weeks on Wednesday, led by economically sensitive
sectors like industrials and basic metals after the upbeat
manufacturing surveys from the world's two largest economies.
Investors are largely staying on the sidelines however,
ahead of a 1230 GMT news conference from European Central Bank
President Jean-Claude Trichet. The ECB is tipped to keep its
liquidity safety-net for banks in place after leaving interest
rates unchanged as expected.
"Low volumes and the fact that people are satisfied that in
isolation equities represent some value (are keeping the bears
at bay)," David Buik, senior partner at BGC Partners said.
The MSCI world equity index <.MIWD00000PUS> rose a quarter
percent to its two-week high. The Thomson Reuters global stock
index <.TRXFLDGLPU> rose 0.3 percent.
The FTSEurofirst 300 index <.FTEU3> was down 0.1 percent,
with investors remaining cautious ahead of Trichet's conference
and Friday's closely-watched U.S. jobs report. Emerging stocks
<.MSCIEF> added 0.5 percent.
"You're getting a lot of quick, knee-jerk reactions in both
directions. These disparate pieces of economic data are being
reacted to but the information is by no means clear," said Angus
Gluskie, portfolio manager at White Funds Management in
Australia.
"We've got the potential for markets to pick up strongly
into the end of the year, but we may well have to go through a
few nervous weeks in September first."
U.S. crude oil <CLc1> erased early gains to stand down 0.8
percent at $73.30 a barrel.
The bund future <FGBLc1> fell 36 ticks, while the euro was
up 0.2 percent at $1.2825 <EUR=>.
France and Spain sold 12.2 billion euros of bonds, with the
average yield on the 5-year Bono dropping at auction and the
paper easily absorbed as the yield fell after the tender
<ES5YT=TWEB>. [ID:nLDE6810D5]
The yen rose 0.4 percent to 84.10 per dollar <JPY=>, off its
15-year high of 83.58 hit last week.
The dollar <.DXY> lost 0.2 percent against a basket of major
currencies.
(Additional reporting by David Brett; Editing by John
Stonestreet)