World stocks just below year high in thin trade

World stocks eked out modest gains on Tuesday, floating below year highs in thin, holiday-inspired trading.

The dollar was slightly lower and 10-year euro zone government bond yields hit 6-week highs before sliding back a bit.

MSCI's all-country world stocks index was up about a quarter of a percent. It was about half a percent below its 2009 high, reached on December 3.

The index has gained some 32 percent this year and is up nearly 75 percent from a low on March 9. This has come as investors have put worries about a major world financial collapse behind them.

European shares gained a little more than 0.1 percent for the sixth consecutive session of gains.

"Europe is up some more today, but obviously volumes are very low, with most traders away from their desk. We expect there to be a low volume sessions right up until the New Year," said Manoj Ladwa, senior trader at ETX Capital.

Earlier, Japan's benchmark Nikkei spent much of the day in negative territory before edging up a mere 3.83 points at 10,638.06.

But it did hit a fresh four-month intraday high of 10,683.12 in early trade.

"Investors seem to be using the last days of this year to search for theme stocks — companies connected to emerging markets, which are likely to remain strong next year, as well as resource-linked shares," said Noritsugu Hirakawa, a strategist at Okasan Securities.

WEAKER DOLLAR

The slightly greater risk appetite among those investors who were trading weakened the dollar while the euro and higher yielding currencies such as the Australian dollar gained.

Volumes were very thin, however, and analysts were wary of drawing too many conclusions from current intraday movements, with the euro still trading within its recent range against the dollar, albeit at the top end.

Against the yen, the dollar stayed supported.

The dollar was a quarter of a percent down against a basket of major currencies. The euro was at $1.4425 and the dollar bought 91.66 yen.

Ten year-euro zone government bonds were yielding 3.362 percent.