* World stocks gain on earnings optimism
* Israel warning to Iran stokes oil, Swiss franc rally
* Sterling falls after BoE inflation report
(Adds details, updates prices)
By Wanfeng Zhou
NEW YORK, Feb 16 (Reuters) - World stocks reached 30-month
highs on Wednesday on strong corporate earnings, while oil and
the Swiss franc rallied after Israel said a move by Iranian
warships to traverse the Suez Canal was a "provocation".
The comments by Israel's foreign minister, together with
reports of protests in Iran, Yemen and Bahrain, raised concern
Middle East tensions could disrupt oil supplies. See
[] and []
The MSCI world equity index <.MIWD00000PUS> rose 0.6
percent to 344.97, after hitting its strongest since August
2008.
Brent crude jumped to 29-month highs and was last up $2.16
at $103.81 <LCOc1>. U.S. crude <CLc1> for March delivery rose
85 cents to $85.18 a barrel, extending gains after data showed
crude oil and gasoline stockpiles rose less than expected last
week.
"Troubles in the Middle East are back on the agenda,
protests in Bahrain and Saudi have drummed up political
tension," said Rob Montefusco, an oil trader at Sucden
Financial.
Wall Street rose after estimate-beating results from
technology bellwether Dell Inc. <DELL.O> and a flurry of deal
news.
The Dow Jones industrial average <> was last up 44.58
points, or 0.36 percent, at 12,271.14. The Standard & Poor's
500 Index <.SPX> rose 5.77 points, or 0.43 percent, to
1,333.78. The Nasdaq Composite Index <> gained 14.85
points, or 0.52 percent, to 2,819.06.
European shares <> posted a 29-month closing high for
the third straight day, supported by strong earnings from
French bank Societe Generale <SOGN.PA> and brewer Heineken
<HEIN.AS>.
The gains followed an earlier jump in Japan's Nikkei
average <> to a nine-month high. Emerging stocks <.MSCIEF>
were up 0.4 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.
SAFE-HAVEN FRANC
The U.S. dollar fell to a session low of 0.9575 Swiss
francs <CHF=EBS> on tensions between Israel and Iran. It pulled
back to trade at 0.9639, down 0.4 percent. The franc is often
seen as a safe-haven in times of geopolitical turmoil.
The dollar also fell versus the euro <EUR=EBS> on the news
from Israel and traders said the dollar was being sold on the
view that this could be a security threat for Israel.
"Should there be a conflict with Israel, this would be bad
for the U.S. as well," said Brian Dolan, chief currency
strategist at Forex.com in Bedminster, New Jersey.
Sterling fell <GBP=D4> after the Bank of England downgraded
its economic outlook in its quarterly inflation report, even as
consumer prices spiked higher. That stoked fears of stagflation
and dampened expectations UK interest rates would rise sooner
rather than later.
"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.
Inflationary pressures may also be building up in the
United States, a potentially troubling development for the
Federal Reserve. Data on Wednesday showed U.S. core producer
prices in January rose to their highest rate in more than two
years. See []
(To see an analysis on market inflation expectations click
on, [])
(Additional reporting by Jessica Mortimer and Jessica Donati
in London; Editing by Andrew Hay)
