By Natsuko Waki
LONDON (Reuters) - World stocks rose for a second straight day on Thursday while the euro sat on the previous day's gains as expectations grew the European Central Bank might deliver measures to alleviate worries over euro zone debt.
The euro posted its biggest one-day rise in more than a month on Wednesday while yield spreads of peripheral issues over German bunds tightened as hopes grew for decisive steps to stop the crisis from spreading to larger economies such as Spain.
Analysts cautioned there was scope for disappointment, saying the ECB was unlikely at this stage to expand its bond purchase program.
"The focus is on whether (ECB President Jean-Claude) Trichet will announce a numerical target for bond purchases," said Roberto Mialich, currency strategist at Unicredit in Milan.
"If he keeps to saying they are ready to buy more bonds but without a numerical target, the markets will be disappointed and turn negative on the euro."
MSCI world equity index <.MIWD00000PUS> rose 0.6 percent to a one-week high, having hit its weakest level in nearly two months earlier this week.
The FTSEurofirst 300 index <.FTEU3> rose a quarter percent while emerging stocks <.MSCIEF> gained one percent.
U.S. crude oil was up 0.1 percent to $86.87 a barrel, staying near a three-week peak.
Bund futures fell 33 ticks.
The euro was steady at $1.3135 after jumping to $1.3183 on Wednesday from an 11-week low on Tuesday. The dollar <.DXY> was steady against a basket of major currencies.
"The most important point is the credibility of these (the euro zone peripheral) countries and for them to become fiscally sustainable in the relevant time horizon, and there's a parallel banking system issue, as we've seen in Ireland," said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.
"The debt crisis is the only thing that is stopping the market breaking higher. The economic data from the States is increasingly reassuring."
Main U.S. equity indexes Dow and the S&P 500 scored their biggest gains in three months on Wednesday.
Stronger-than-expected U.S. private sector jobs data lifted optimism for the country's labor market, seen as one of the weakest parts of the economy.
(Additional reporting by Tamawa Desai; editing by Patrick Graham)
