* European bourses less hit than Wall Street
* Economic updates from Davos eyed
* German IFO business index shows resilience
* ECB says could see interest rate "lift-off" in July
By Huw Jones
LONDON, May 23 (Reuters) - Stocks hovered just above bear
market territory on Monday as economic fallout from the war in
Ukraine and persistently high inflation capped gains in equity
benchmarks.
Oil rose, gold extended its recent gains, but the dollar
slipped as investors cut their bets on further advances in the
U.S. currency from rising interest rates.
Investors in Europe drew comfort from the S&P 500 index
on Wall Street ending Friday just clear of bear market
territory, meaning down 20% from its Jan. 3 record high close.
The MSCI all country index was up 0.16%,
still down nearly 18% from its record high in January.
The S&P index suffered its seventh successive weekly fall
for the first time since the dotcom bubble burst in 2001,
Deutsche Bank said in a note.
"For what it's worth the Dow saw the first successive 8th
weekly decline since 1923 which really brings home the state of
the current sell-off," Deutsche Bank said.
S&P 500 futures were up 0.7%, indicating a steady
open in New York, though analysts sounded a note of caution.
"I don't think we have reached rock bottom yet, it's a bear
market rally. The market is still pretty concerned about sticky
inflation," said Michael Hewson, chief markets analyst at CMC
Markets.
The STOXX index of 600 European companies rose 0.7%
to 435.7 points, down about 13% from its January record high.
U.S. stock markets have been harder hit than Europe because
they were more overvalued, and the U.S. Federal Reserve is being
more aggressive in prioritising the fight against inflation over
other factors, Hewson said.
"We haven't had that extent of hawkishness from the Bank of
England or the European Central Bank, and I think that's why the
losses in Europe have been slightly more modest," Hewson said.
ECB President Christine Lagarde said on Monday there could
be an interest rate "lift-off" at its meeting in July.
European resilience was highlighted by Germany's Ifo
business climate index for March unexpectedly rising to 93 in
May, defying market expectations of a fall to 91.4.
"The gradual return of optimism continues but only if the
focus is limited to the very short run," ING bank said.
The German DAX blue chip index was up 1%.
The World Economic Forum holds its first in-person meeting
in two years in Davos, Switzerland over the coming four days,
with central bankers and the International Monetary Fund
participating in panels on the outlook for economies and
inflation.
PEAK DOLLAR?
The dollar index, which tracks the U.S. unit against
a basket of currencies of other major trading partners, was down
0.3% at 102.60. The index rose by about 16% to a two-decade high
over the 12 months to mid-May.
"The dollar may be carving out a peak, given Europe's
resilience to the energy shock and potential easing of lockdowns
in China," said Commonwealth Bank of Australia strategist Joe
Capurso.
The benchmark 10-year Treasury yield rose to
2.8045% from its U.S. close of 2.787% on Friday. Euro zone
government bond yields also edged higher.
The two-year yield, which rises with traders'
expectations of higher Fed fund rates, rose to 2.6037%.
Asian stocks fell as investors worried inflation and rising
interest rates would hamper the global economy's performance.
MSCI's broadest index of Asia-Pacific shares outside Japan
was slightly weaker.
U.S. crude gained 1% to $111.43 a barrel as the peak
U.S. holiday season driving looms. Brent crude rose
1.15% to $113.85 per barrel.
The concerns over global economic growth have prompted
renewed support for gold.
"Gold prices saw the first weekly gain since mid-April as
safe-haven demand was boosted by concerns over economic growth
amid high inflation," ANZ analysts said in a research note on
Monday. "A weaker U.S. dollar has also boosted investor
appetite."
Spot gold was 0.6% higher at $1,857.8 per ounce.
(Editing by Sam Holmes and Emelia Sithole-Matarise)
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