World stocks rise as oil plumbs 13-month low

European shares rise on corporate earnings, easier oil. Brent crude oil prices fall below $103 on ample supplies. Sterling hits 10-week low vs dollar as UK wages fall.

World stock markets ticked higher on Wednesday, lifted by brighter corporate results and as oil prices plumbed 13-month lows with ample supply offseting output disruption risks posed by tensions in Iraq and Libya.

European shares gained ground, helped in part by forecast-beating results from bellwethers such as Swiss Life .

The FTSEurofirst 300 index of top European shares was up 0.3 percent, with MSCI's world stock index up 0.2 percent.

The biggest mover in currency markets was sterling, which fell 0.6 percent against the dollar to a 10-week low after the Bank of England slashed its forecast for wage growth, prompting investors to push back expectations of when interest rates would rise.

U.S. stocks index futures indicated Wall Street, which eked out slight gains on Tuesday, would open higher.

Recent market anxiety over the standoff between Russia and Ukraine ebbed slightly after Polish Foreign Minister Radoslaw Sikorski said late on Tuesday that the possibility of Russia's military invading eastern Ukraine had receded after Moscow agreed to send in humanitarian aid under Red Cross auspices.

However, Ukraine on Wednesday denounced the dispatch of the convoy and said it would not be allowed in.

Russian shares rose more than 1 percent.

"The market is rangebound for now, with the focus on the tense situation in Ukraine, as well as on GDP figures for Germany and France due tomorrow," IG France chief market analyst Alexandre Baradez said.

"There's a lot of confusion about the Russian humanitarian convoy heading to Ukraine."

OIL SINKS

Brent crude slipped below $103 a barrel to trade at its lowest level in more than a year as supply continued strong.

September Brent crude futures, which expire on Thursday, fell as low as $102.37, the weakest for a front-month since July 1, 2013. It was the fourth day of losses for the benchmark and comes after the International Energy Agency (IEA) pointed to well-supplied global markets and a glut in the Atlantic Basin.

Output from the Organization of the Petroleum Exporting Countries rose to a five-month high of 30.44 million barrels per day (bpd) in July as increased production from Saudi Arabia and Libya more than offset declines in Iraq, Iran and Nigeria.

"Brent prices have been in a steady decline and I think the background of that is that the market is forming the view that any supply disruptions are not on the immediate horizon," CMC Markets chief market analyst Ric Spooner said.

But sub-par global economic numbers were also a factor in generally weak commodity prices. Copper, seen as a barometer of world demand, fell to a six-week low of $6,926.50 per tonne on Wednesday.

ASIA CHILL

Asian shares made modest gains, even though mainland Chinese shares were knocked off their highs by surprisingly weak loans data. Data also showed Japan's economy shrank an annualised 6.8 percent from the previous quarter - the biggest contraction in three years - but the outcome was slightly better forecast.

German government bond yields held close to record lows on Wednesday, with a 10-year debt auction suggesting strong underlying demand for German paper due to a uncertain economic outlook and rising expectations the European Central Bank would further ease monetary policy.

German inflation for July was confirmed at 0.8 percent year-on-year, showing how weak inflationary pressures are even in the region's strongest economy.

Euro zone industrial output unexpectedly dropped in June, falling 0.3 percent compared with May and second-quarter gross domestic product reports from across the region are due on Thursday.

German 10-year yields rose 1 basis point to 1.07 percent, having hit a record low of 1.02 percent last week.

"The recovery in the euro zone is pretty weak and we also see the effect of geopolitical fears in the market," DZ Bank rate strategist Christian Lenk said.

Sterling fell as low as $1.6703 and the euro firmed to above 80 pence for the first time in six weeks.

The BoE, in its quarterly inflation report, cut in half its forecast for wage growth this year to 1.25 percent and said the pay data would help determine when interest rates would rise.

Earlier, figures showed wages fell 0.2 percent in the second quarter compared with the same period in 2013.

Markets pushed back their expectations of when rates would rise to next February 2015 from December.

By Mike Dolan