(Updated, adds Wall Street outlook)
By Jeremy Gaunt, European Investment Correspondent
LONDON, Aug 11 (Reuters) - The dollar hit a six-month high
against major currencies on Monday, driven by concerns that U.S.
economic problems are spreading to the rest of the world, while
equities rose.
Europe's FTSEurofirst 300 <> share index hit its
highest level since late June and Japan's Nikkei <> gained
nearly 2 percent. Wall Street looked set for a modestly positive
start.
Military conflict between Russia and Georgia ignited fears
that energy exports from the Caspian region may be disrupted in
the longer term, nudging oil prices up. But they remained around
$116 a barrel, well below recent highs.
The fighting in Georgia and concerns about the global
economy kept emerging market stocks <.MSCIEF> near Friday's
one-year low.
The dollar vaulted to a six-month high against its major
currency basket while the euro <EUR=> for a time fell further
below $1.50 after suffering its biggest one-day drop since
January 2001 on Friday.
The euro later recovered to stand around $1.502.
"The dollar has been strengthening due to a deterioration in
economic data outside of the U.S. coupled with low oil prices,"
said Ashley Davies, currency strategist with UBS in Singapore.
Investors were also caught off guard by the European Central
Bank's acknowledgment last week that economic growth had slowed
more than it expected.
The dollar index, which measures the U.S. currency against a
basket of six currencies, punched to a six-month high of 76.192
before pulling back to 75.736 <.DXY>.
Crude oil <CLc1> was up $1.08 at $116.30 a barrel,
rebounding from the previous session's $5 decline on concern
that the fighting between Russia and Georgia could further
disrupt energy exports from the Caspian region.
The Baku-Tbilisi-Ceyhan (BTC) oil pipeline, which passes
through Georgia, is already closed after an explosion on Turkish
territory before the South Ossetia conflict began.
But analysts said oil's gain was tempered by the rising U.S.
dollar. Oil has shed about $31, or 21 percent, since its peak of
over $147.27 struck on July 11, on concerns of a slowdown in
demand.
SHARES RISE
European stocks hit their highest in more than 6 weeks, with
automakers rising on the euro's weakness which helps exports.
The FTSEurofirst 300 <> index was up 0.8 percent
having hit its highest level since June 26.
"A weaker euro/stronger dollar would be a welcome source of
relief for a beleaguered auto sector," Morgan Stanley said in a
note to clients.
Earlier, Japan's benchmark Nikkei <> gained 262.50
points or 1.99 percent, to 13,430.91, its highest close since
July 24. The broader Topix gained 1.6 percent to 1,280.00.
Euro zone government bonds held steady. Two-year yields were
at 4.075 percent <EU2YT=RR> while 10-year yields were at 4.260
percent <EU10YT=RR>.
