(In para 19 amends institution's name to State Street Global
Advisors (not Investors)
* Global stocks just off one-week low after 2 pct Nikkei
fall
* European bourses a touch higher pre-ECB
* Brexit weighs on sterling
By Sudip Kar-Gupta and Sujata Rao
LONDON, June 2 (Reuters) - World stocks hovered just off
one-week lows on Thursday, dragged down by an earlier 2 percent
slump in Japan and lacklustre European markets, while concerns
over Britain's future in the EU continued to weigh on sterling.
Futures prices signalled a flat to weaker Wall Street open.
While European bourses inched into positive territory, gains
were capped by investors' reluctance to take big positions
before a meeting of the European Central Bank followed by a 1230
GMT press conference by ECB President Mario Draghi.
While the bank is not expected to announce any policy
changes, it may raise growth and inflation forecasts, a rare
positive step even as it emphasises persistent negative risks.
However, political concerns such as Britain's Brexit vote
are combining with persistent worries over the world economy to
keep markets in a dour mood, especially after a series of
disappointing manufacturing data in China and Europe this week.
"We are treading water at best these days, fighting the
headwind of all sorts of nasties such as Brexit in the UK. We
don't have a clear picture of where global growth is going to go
- as some regions show signs of recovery, others drop away
again," said Peter Lowman, CIO of Investment Quorum, a UK-based
wealth manager.
In the United States, manufacturing grew for a third
straight month in May, but factories appeared to be taking in
fewer deliveries from suppliers, potentially hampering future
production
These figures along with other recent data has served to
make markets more confident that the U.S. Federal reserve will
hold back from a June rate rise.
That pushed the dollar further off two-month highs hit
earlier this week against a basket of currencies .DXY while
versus the yen the greenback hit two-week lows JPY= , falling
half a percent.
The Japanese currency has been boosted by safety-seeking
flows driven by Brexit worries, but also the government's
decision to delay a sales tax hike due to the lacklustre
economy. But that dragged down the export-heavy equity index by
2.3 percent, its biggest one-day loss in a month .N225 .
MSCI's world equity index - a compilation of stocks from 45
countries - was flat .MIWD00000PUS .
Lowman said uncertainty over the recovery worldwide as well
as in the United States could delay rate hikes even further to
September.
"What (Federal Reserve Chair Janet) Yellen doesn't want to
do is create a crash in financial assets and kill off what
growth they have got," Lowman added.
Expectations the ECB will raise growth and inflation
forecasts supported the euro EUR= on foreign exchange markets
while the pan-European STOXX 600 .STOXX and FTSEurofirst 300
indexes .FTEU3 rose around 0.2 percent each.
There is also a chance the ECB will signal the return of a
funding lifeline for Greek banks and those hopes helped the
country's bond yields to hold near six-month lows hit last week
Along with the ECB, an OPEC meeting in Vienna was also in
focus. While the group is not expected to restrict crude output
to support prices, outages in several countries helped support
Brent futures just below $50 a barrel LCOc1 O/R .
BREXIT WOES
British markets remained in thrall to the Brexit debate as
the June 23 referendum on the UK's European Union membership
approaches. While a YouGov poll published on Wednesday showed
British voters evenly split between "Remain" and "Leave", two
surveys the previous day showed a move towards leaving the EU.
Britain's hefty current account deficit - 7 percent of
output in the last quarter of 2015 - makes the economy, and the
currency, vulnerable to any pull-back in investment flows.
"I think currency is quite often the first place that
investors vent their concerns. There's likely to be a quite
rapid downward movement in sterling," said James Binny, Head of
Currency, EMEA at State Street Global Advisors.
Sterling GBP= has lost more than 1 percent this week
against the dollar and is currently at two-week lows while the
cost of hedging against swings in the currency in options
markets remains near seven-year highs GBP1MO= GBP/
Once the ECB is out of the way, attention will shift to the
U.S. non-farm payrolls data on Friday, though private ADP jobs
numbers due later on Thursday may also provide clues on the
state of the world's biggest economy.