Euro zone economic sentiment improved more than expected in June, data showed on Monday, as the European Commission predicted the worst could be over for the 16-country currency area.

“The ECB will find themselves affirmed that the economy is bottoming out and that the worst is over,” said Joerg Angele, analyst at Bayerische Landesbank.

“It’s bad, but it’s not getting worse.”

The FTSEurofirst 300 index rose 1 percent, led by energy companies and financials.

The MSCI world equity index edged up 0.12 percent towards 12-day highs hit on Friday. However, the index is down over 4 percent from the year’s highs set earlier this month.

U.S. stock index futures indicated a slightly higher open on Wall Street.

World stocks have shuffled sideways in the past few weeks as investors have questioned how quickly the global economy will return to growth, giving a boost to battered government bonds and pushing yields lower.

U.S. employment data are due on Thursday ahead of a U.S. holiday on Friday, and the European Central Bank and Sweden’s Riksbank issue policy statements this week.

“With the payrolls coming up, and the ECB and Riksbank, I don’t think there’s a great appetite to take on big risk this week,” said Maurice Pomery, managing director of Strategic Alpha.

Many investors are also sticking to the sidelines as the second quarter winds down and ahead of U.S. and European summer holidays.

CHINA WATCH

The dollar index, a gauge of its performance against six major currencies, dipped 0.05 percent to 79.833, but held off a two-week low struck on Friday.

The euro inched up 0.07 percent to $1.4059 , recouping losses earlier in the session, and the dollar was up 0.16 percent against the yen at 95.35 .

The dollar fell last week after China, which holds nearly $2 trillion of reserves believed to be concentrated in dollars, repeated its calls for an end to the dominance of a single currency in global finance.

China and Brazil said on the sidelines of a weekend meeting of central bankers in Basel they were discussing a currency arrangement to allow exports and importers to settle deals in local currencies, thereby avoiding the dollar.

Pressure from emerging market countries to seek an alternative to the dollar as reserve currency has contributed to weakness in the U.S. currency in recent weeks.

Crude oil rose 0.74 percent to $69.89 a barrel on supply concerns after Nigeria’s main militant group said it attacked a Royal Dutch Shell oil platform.

Euro zone government bond futures rose 20 ticks , helped by strong gains in UK gilts on month-end buying and weak UK data.

LONDON, June 29 (Reuters)

Concerns that Washington might nationalize big U.S. banks — which would wipe out shareholders and add to the fiscal burden — had weighed on stocks and other risky assets.

However, Bernanke said on Tuesday the significant value built up in the country’s banks would be lost if they were government-owned and though there could be a time when it became necessary to close banks down, now is not the time.

U.S. stocks rose more than three percent on Tuesday.

“It’s all about the equity rally we had last night and the U.S. shying away from nationalizing the banks,” said David Keeble, rate strategist at Calyon. MSCI world equity index rose 1 percent while the FTSEurofirst 300 index gained 1.5 percent.

Emerging stocks rose 1 percent. Oil rose 0.2 percent to $40.03 a barrel .

WANING STATUS

The yen fell as low as 97.33 per dollar , levels last seen in November. The Japanese currency also hit its weakest levels in almost seven weeks of 125.17 per euro .

A rapidly deteriorating domestic economy and political uncertainty has been hitting the low-yielding yen’s safe haven appeal, wiping out the inverse correlation between equities and the Japanese currency.

Wednesday’s data showed exports plunged a record 45.7 percent in January from a year earlier, with record slides in shipments to the United States, Europe and the rest of Asia pointing to a deepening recession across much of the world.

“The fundamental case for a weaker yen has become more pressing with Japan reporting its fourth monthly trade deficit in a row, suggesting that the current account surplus will melt down further, reducing commercial yen buying needs,” BNP Paribas said in a note to clients.

LONDON, Feb 25 (Reuters)

World stocks rebounded from a  5-1/2 year low on Friday and oil rose above $50 as expectations  of further interest rate cuts helped to cushion deepening gloom  about the broader economy.

Wall Street was set for a firmer start, one day after the  benchmark S&P 500 index fell to its lowest level since  1997 as troubles at Citigroup (C) and U.S. automakers  triggered fears about the wider economy.

However, hopes that the world’s central banks would cut  interest rates further — with talk that China might lower   borrowing costs later on Friday — helped world stocks off an  earlier 5-1/2 year low.

“The darkest hour is just before dawn,” said Justin Urquhart  Stewart, director at Seven Investment Management.

“The actions being taken are the key difference between the  1930s and now.”  MSCI world equity index was up 0.9 percent  after hitting its lowest level since April 2003.

The FTSEurofirst 300 index also rose 0.2 percent.  Emerging stocks gained 2.5 percent. U.S. stock futures  were up almost 3 percent.

U.S. crude oil gained 1.7 percent to $50.23 a barrel,  having hit a 3-1/2 year low below $49 earlier.

The December bund future fell 30 ticks, reversing  earlier gains. The two-year U.S. Treasury yield touched a fresh record low of 0.9586 percent before rising.

In Asia, the 10-year Treasury note dropped a full point in  price to yield 3.112 percent, after hitting 2.990  percent on Thursday — its lowest level since the 1950s. The  10-year yield was trading at above 4 percent only in June.

“The main risk is the recession and that we are probably  ahead of the worst year over the last century in terms of  economic growth and that this will take its toll on many  industries,” said Kornelius Purps, fixed income strategist at  UniCredit.

“We are probably only at the beginning of this poor  performance in terms of economic growth and other factors will  follow. This is quite worrisome and will keep a bid in the bond  market.”

The yen fell 1 percent to 94.62 per dollar after  hitting a three-week high beyond 94 earlier. The dollar fell 0.5 percent against a basket of major currencies.

LICENSE TO CUT?

Talk of Chinese interest rate cuts complemented a rumour  that authorities might soon announce the creation of a 300  billion yuan fund to support the stock market.

Euro zone interest rates are also expected to fall next  month, and possibly earlier. A purchasing managers index survey  showed on Friday that output of euro zone services and  manufacturing business sank much further and faster than  expected in November to record lows.

JP Morgan (JPM) also said that bigger-than-expected declines in  Canadian inflation also allow the central bank to cut interest  rates more aggressively in December by as much as half a  percentage point.

The Bank of Japan, however, kept its key policy rate  unchanged at 0.30 percent on Friday. Governor Masaaki Shirakawa  said more rate cuts could disrupt markets as they might cause  various problems in ensuring smooth fund supply in money  markets.