* World stocks gain on earnings optimism
* Wall Street up; oil climbs on Mideast unrest
* Sterling falls sharply after BoE inflation report
By Wanfeng Zhou
NEW YORK, Feb 16 (Reuters) - World stocks climbed toward
recent 30-month highs on Wednesday, boosted by strong corporate
earnings, while sterling fell broadly after the Bank of England
dampened expectations interest rates will rise sooner rather
than later.
Oil prices climbed as rioting in Libya added to concerns
that Egyptian and Tunisian-style revolts could spread to
oil-producing countries in the Middle East and potentially
disrupt supplies.
The MSCI world equity index <.MIWD00000PUS> was up 0.3
percent at 343.98, edging close to a high hit earlier this
month of 344.63 which marked its strongest since August 2008.
Sterling tumbled against the euro and dollar after the Bank
of England downgraded its economic outlook in its quarterly
inflation report even as it sees inflation spiking higher,
stoking fears of stagflation.
"The key guidance being that any tightening ahead is likely
to prove modest with potentially only 0.50 point of tightening
in 2011," said Lee Hardman, currency economist at Bank of
Tokyo-Mitsubishi UFL. "Such guidance has disappointed current
market expectations which had moved to discount even more
aggressive tightening ahead."
U.S. stocks opened higher after strong results from Dell
and a burst of merger and acquisition activity.
The Dow Jones industrial average <> was up 43.60
points, or 0.36 percent, at 12,271.94. The Standard & Poor's
500 Index <.SPX> rose 5.19 points, or 0.39 percent, at
1,333.03. The Nasdaq Composite Index <> gained 11.45
points, or 0.39 percent, at 2,815.45.
European share prices edged up, supported by strong
earnings from French bank Societe Generale <SOGN.PA> and brewer
Heineken <HEIN.AS>, The pan-European FTSEurofirst 300 <>
index was last up 0.3 percent.
"There is a growing confidence in the outlook for the
global economy. The recovery looks like it is being transformed
into a sustainable expansion and that does mean that the
outlook for earnings is very positive," said Mike Lenhoff,
chief strategist at Brewin Dolphin.
The gains followed an earlier jump in Japan's Nikkei
average <> to a nine-month high, helped by a weaker yen
and buying by foreign investors.
OIL GAINS
Brent crude <LCOc1> for April delivery rose by 88 cents to
$102.49 a barrel, hovering $2 below a 28-month peak of $104.30
on Monday. U.S. crude <CLc1> for March delivery gained 38 cents
to $84.70 a barrel.
"Today the protest has spread to Libya ... All countries
with demonstrations are trying to calm protests ... but it's
difficult to say if they are succeeding," said Thorbjrn Bak
Jensen, an oil market analyst at A/S Global Risk Management
Ltd.
Traders will scour the Energy Information Administration's
(EIA) report, to be unveiled later, for confirmation of the
decline in U.S. weekly crude inventories seen in Tuesday's data
from the American Petroleum Institute (API).
The dollar rose against the euro <EUR=EBS> after U.S.
economic data showed producer prices edged up last month and
housing starts rose more than expected, bolstering views that
the economy is strengthening.
Emerging stocks <.MSCIEF> were up 0.2 percent.
(Additional reporting by Jessica Mortimer and Jessica Donati
in London; Editing by Chizu Nomiyama)
