GLOBAL MARKETS WEEKAHEAD-FX moves giving investors a headache

(Reuters) - Increasingly volatile currency moves are becoming a headache for largely-unhedged equity investors and corporates as markets prepare themselves for central banks to wind down super loose money conditions. The dollar hit a 13-month low against major currencies .DXY this week as risk-hungry investors dumped low-yielding assets, while sterling fell to its lowest in 6 months versus the euro EURGBP= after Bank of England Governor Mervyn King said a weaker currency was helping to rebalance the nation's economy.The timing of the "exit", or scaling back of emergency economic support, is key for investors of all asset classes as interest rates, which are near zero in many developed economies, will have to rise eventually to ease inflationary pressures.And policymakers may have already begun to take a step towards the exit. Major world central banks announced on Thursday they planned to wind down facilities allowing them to inject emergency tranches of U.S. dollars into their banks.

Events next week are set to bring more clues on exit policy as finance chiefs move from Pittsburgh to Istanbul to attend the IMF/World Bank meeting. The monthly U.S. employment report will update on the state of the U.S. economy. As the third quarter draws to an end, the MSCI world equity index .MIWD00000PUS have risen more than 16 percent since the start of July, gaining more than 25 percent -- recouping more than half of last year's losses.But on Friday the MSCI index hit a 1-1/2 week low. While some say this is a natural correction after a big rally, others warn investors are already getting prepared for an eventual rise in borrowing costs or growing nervous about currency moves."(Stable currency markets) had been quite helpful for risk appetites. People just felt a little bit more comfortable.

That disappeared," said Michael Dicks, head of research and investment strategy at Barclays Wealth."Wobbles in currencies and a lot of second-order issues associated with them got people worrying. There's real uncertainty coming into the policy setting. And this is making it harder work for the rally to be sustained."Dicks said U.S. and UK real estate markets enjoy high correlation but sharp currency moves could generate a shift in performance, a factor which could postpone investment decisions. According to Thomson Reuters data, the S&P 500 index .SPX has risen 16.3 percent in dollar terms, compared with less than 10 percent in euro terms.