* Mining, energy shares up 2-3 pct in Europe
* Emerging markets at highest in almost two months
* Hopes for QE help investors shrug off weak data
* But BOJ's Kuroda holds off on fresh stimulus
(Adds broker comments, earnings, prices, U.S. market)
By Lionel Laurent
LONDON, Oct 7 (Reuters) - A recovery in oil prices spread to
stock markets and emerging market currencies on Wednesday, with
the prospect of more support from the world's central banks
offsetting more disappointing economic data.
After a dismal summer quarter in which global equities fell
the most since 2011, traders say fund managers were ready to
pile back in, hoping the recent market reversal was a hiccup
rather than the end of a six-year bull market.
Mining and energy shares were the big winners in Europe, up
3 to 6 percent, with miners on course for their best week since
2009. Emerging-market stocks .MSCIEF rose 2.4 percent, to
their highest level since mid-August, although tourism and
airline stocks fell on the prospect of a squeeze on profits from
higher input costs.
Asian shares reached a seven-week high. South Korea's
Samsung Electronics (KS:005930) 005930.SS improved sentiment when it
issued a better-than-expected profit guidance.
All that left global equities set for their sixth
straight day of gains and just 5.5 percent below where they were
at the end of June, before a summer sell-off hit markets.
"We think we're setting up for a strong fourth quarter
rally, even if the next few weeks remain volatile...We are
starting to see a rollover in momentum strategies and we expect
this to continue," Morgan Stanley (NYSE:MS) strategists wrote in a note.
U.S. equities were also set to join the fray with futures up 0.5 percent.
The heart of the rally was a jump of more than $1 for U.S.
crude oil CLc1 to $49.64 per barrel. However, the gain was
largely driven by evidence of tighter supply and dwindling
inventories after two years of heavy surplus and a collapse in
commodity prices.
In fact, there was little reason for more optimism on the
underlying economy on Wednesday. Data showed German industrial
output fell in August at its fastest pace in a year and growth
in Spanish output slowed. British industrial output did recover
better than expected, however, pushing up sterling.
Although the Bank of Japan held off on expanding monetary
stimulus on Wednesday, expectations of more support rather than
less is growing, as worries mount over a global economic
slowdown. This week, the International Monetary Fund cut its
forecast for growth again.
"The sense is that interest rates are not going to rise in
the foreseeable future," said Deutsche Bank (XETRA:DBKGn) Managing Director
Nick Lawson, adding that after a rough September investors were
ready to put more firepower into rebound bets.
"The market is proving its addiction to QE (quantitative
easing)."
Investors have scaled back expectations the Federal Reserve
will raise interest rates this year after surprisingly weak U.S.
jobs data on Friday. Worries over the American economy grew
after the largest expansion of the U.S. trade deficit in five
months.
Corporate earnings are also expected to bear the scars of
summer volatility. Yum Brands YUM.N , Adobe ADBE.O , Rexel
RXL.PA and Kloeckner KCOGn.DE were the latest companies to
cut their profit forecasts.
While Citi strategists have warned that analyst earnings
forecasts are too optimistic, they have also backed the view
that the bull market has yet to die with a prediction that
global equities will still rise 20 percent through to end-2016.
The market is "already pricing in" a gloomier scenario, they
argue.
Beaten-up emerging markets, meanwhile, got a lift to their
currencies amid the rally. The Indonesian rupiah surged
2.3 percent on Wednesday, taking its gains so far this week to
over 5 percent. The Malaysian ringgit also jumped 2.4
percent.
The New Zealand dollar NZD=D4 popped to a seven-week high
on a solid rise in dairy prices. The Australian dollar hit a
two-week high of $0.7188 while the Canadian dollar firmed
to C$1.3026, nearing its September peak of C$1.3013.
The euro traded at $1.1267 EUR=, near this week's high of
$1.12895, before falling back to $1.1242. The dollar's index
against six major currencies .DXY picked up slightly after
falling to 95.327, its lowest level this week and near Friday's
low of 95.218.