By Jamie McGeever
LONDON (Reuters) - World shares rose on Friday and were on course for their best month in four years, as global central banks kept stimulus policies intact and many hinted at further steps to re-energise their economies.
That has helped soothe concern over higher borrowing costs in the United States as the Federal Reserve prepares to tighten rates, possibly by the end of the year.
The dollar slipped for a second day, notably against the yen after the Bank of Japan left policy unchanged. Government bond yields also slipped back after two days of Fed-fuelled increases.
European stocks got an early boost from corporate earnings, with results from France's Renault, BNP Paribas and Airbus in particular getting the thumbs up from investors.
The pan-European index of leading 300 shares was last down 0.3 percent on the day at 1,480 points, Germany's DAX and Britain's FTSE 100 were down 0.4 percent and France's CAC 40 was down 0.2 percent.
U.S. stock futures pointed to a slightly higher open on Wall Street, which is poised for its best monthly performance in four years. [.N]
Despite having slipped into red by midday the FTSEurofirst index was set for its best monthly performance since mid-2009, rising around 8 percent in October.
"Continued expectation of easier central bank policy has helped underpin equity markets after a turbulent few months," said Michael Hewson, chief market analyst at CMC Markets in London.
"Investors are veering between confidence that the U.S. economy is still performing well enough to withstand a rate rise, to an expectation that if it's not, the Fed will remain on hold," he said.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1 percent but poised to gain more than 7 percent for October, its best showing since January 2012.
MSCI's leading global equity index was up 0.15 percent on Friday, bringing its monthly gain up to around 8 percent, its biggest since October 2011.
Japan's Nikkei stock index ended up 0.8 percent, its highest in more than two months, buoyed by a media report that the government is considering a supplementary budget of over $25 billion.
EURO ZONE NOFLATION
The BOJ's decision to keep monetary policy steady was in line with most expectations, but some investors had speculated the central bank would deliver some additional steps to support Japan's economy.
The BOJ also trimmed its price and growth forecasts on Friday, and many still expect it to eventually deliver more easing.
U.S. data released overnight showed gross domestic product in July-September increased at a 1.5 percent annual rate. That was just shy of the consensus forecast for 1.6 percent growth and slowing from a 3.9 percent rise in the second quarter.
But solid consumer spending kept alive the possibility that the Fed could deliver an interest rate increase in December.
Although the Fed held policy steady on Wednesday, it left the door open to raise interest rates for the first time since 2006 when it meets Dec. 15-16.
In currencies, the dollar fell against the yen after the BOJ policy decision, slipping to an intraday low of 120.29, and was last down about 0.6 percent at 120.45 yen.
The euro also regained ground from the dollar, rising 0.3 percent to $1.1005 after euro zone inflation edged up to 0 percent in October from -0.1 percent the month before.
"Absent any negative commodity price shock going forward, September likely marked a trough for headline inflation," JP Morgan's Raphael Brun-Aguerre wrote in a note to clients.
The euro is still down about 1.5 percent for the month, after European Central Bank chief Mario Draghi took a surprisingly dovish stance that suggested further monetary easing steps were possible in December.
China's yuan chalked up its biggest daily rise against the dollar since its one-off revaluation in July 2005, after suspected intervention by the Chinese central bank through state banks. It rose around 0.6 percent, pushing the dollar down to 6.3172 yuan.
Benchmark U.S. Treasury yields also slipped back from this week's highs.
The 10-year yield was down two basis points at 2.15 percent, having climbed 15 basis points on Wednesday and Thursday. The two-year yield was down a basis point at 0.72 percent.
Crude oil futures clawed back earlier losses and were last in the black. U.S. crude was up 0.2 percent at $46.14 a barrel, while Brent was up 0.5 percent at $49.05.
(Reporting by Jamie McGeever; Editing by Alison Williams; To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub)
