* World stocks firm, post best week so far in 2011
* Greenback rallies as tightening seen soon
* Gold slips on dollar strength
* Oil dips but Mideast, Libya lend support
(Updates to U.S. markets' close)
By Rodrigo Campos
NEW YORK, March 25 (Reuters) - Global stocks posted their
best week since December on Friday, while the dollar rallied
after a Federal Reserve official said the U.S. central bank
should tighten monetary policy soon.
Helped by a rise in tech shares after an upbeat outlook
from Oracle Corp the day before, the S&P 500 notched its best
week in two months. But low volume spurred questions about the
equities rally's strength.
"Overall, I keep looking at the pluses and minuses and this
week has been spectacular with respect to everybody ignoring
the minuses," said Kim Caughey Forrest, senior equity research
analyst at Fort Pitt Capital Group in Pittsburgh.
The MSCI All-Country index <.MIWD00000PUS> gained 0.2
percent, up for seven straight sessions and posting its best
week since early December.
Volume has dwindled in U.S. and other equity markets as
violence in the Middle East and northern Africa, coupled with
Japan's natural disasters two weeks ago and its nuclear power
crisis, obscure the outlook for the global economic recovery.
The Dow Jones industrial average <> gained 50.03
points, or 0.41 percent, to 12,220.59. The Standard & Poor's
500 <.SPX> rose 4.14 points, or 0.32 percent, to 1,313.80. The
Nasdaq Composite <> added 6.64 points, or 0.24 percent, to
2,743.06.
The dollar rallied after several top Federal Reserve
officials said the U.S. central bank is unlikely to extend its
bond-buying stimulus program beyond a planned $600 billion.
Philadelphia Fed Bank President Charles Plosser also said
the Fed will have to reverse its easy money policy in the
"not-too-distant future" to avoid sowing the seeds of
inflation, changing the outlook for interest rates. Plosser is
a voting member of the Fed's policy committee.
The euro and yen hit session lows versus the greenback
after Plosser's comments, adding to strength in the U.S.
currency after government data showed the U.S. economy grew
more quickly than thought in last year's fourth quarter.
The dollar index <.DXY>, a gauge of the greenback against a
basket of major currencies, jumped 0.7 percent.
The euro <EUR=EBS> was last down 0.7 percent at $1.4081.
The yen traded at 81.36 from a session low of 81.49 per
dollar <JPY=>.
European leaders reached an agreement on anti-crisis
measures at a summit but had to delay increasing their rescue
fund and faced problems from Portugal's government collapse.
[] and [].
The crisis could force Lisbon to request a bailout and make
it the third euro-zone country to seek aid after Greece and
Ireland.
Portuguese bond yields hit new highs after Standard &
Poor's downgraded the country's debt ratings and warned it
could cut them again.
Ireland's prime minister made a plea to the European
Central Bank to extend its lifeline to the country's banks,
giving Dublin more time to tackle its problems.
Spain's Prime Minister Jose Luis Rodriguez Zapatero said he
did not fear contagion from a potentially prolonged period of
political instability in Portugal. []
European shares closed slightly higher on stronger economic
signs and corporate results, but the debt crisis kept gains in
check.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
FX COLUMN-Return of the yen carry trade []
Reuters polls on world stock markets: []
Graphic on world stock polls: http://r.reuters.com/juw68r
European sovereign debt crisis: http://r.reuters.com/hyb65p
Japan disaster in figures: http://r.reuters.com/ser58r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
OIL, PREY TO MIDEAST
U.S. crude <CLc1> and Brent <LCOc1> dipped for the day but
posted weekly gains as investors eyed the unrest in Libya and
the Middle East.
Spot gold <XAU=> dipped after losing nearly 2 percent as
the dollar spiked, following a brief rally to an all-time high
$1,447.40 on Thursday.
Japan's Nikkei index <> rose 1.1 percent to post its
best week since November as foreign investors scooped up
battered shares. In the previous two weeks, the Nikkei had lost
nearly 14 percent.
But U.S. dollar-denominated Nikkei futures <NKc1> dropped
nearly 1.5 percent.
(Additional reporting by Ann Saphir, Steven C. Johnson, Chuck
Mikolajczak, Wanfeng Zhou, Axel Bugge and Shrikesh Laxmidas;
Editing by Kenneth Barry and Dan Grebler)
