* US stocks rebound, world stocks at 30-month highs
* Oil prices steady amid Israel-Iran tensions
* Middle East unrest boosts safe-haven franc, Treasuries
(Updates prices, adds details)
By Wanfeng Zhou
NEW YORK, Feb 17 (Reuters) - The safe-haven Swiss franc and
U.S. government bonds rallied on Thursday, while oil prices
steadied near recent highs as unrest in the Middle East and
tensions between Israel and Iran escalated.
Bahrain police stormed a square in Manama, killing at least
three people as protests in the Middle East and North Africa
gathered pace. Clashes were also reported in Libya, while at
least 40 were wounded in Yemen in demonstrations against the
president's 32-year rule.
Iranian state TV said on Thursday two Iranian warships are
due to pass through the strategic Suez Canal. A similar plan
was announced on Wednesday but then canceled.
The U.S. dollar fell 0.8 percent to 0.9514 Swiss franc
<CHF=EBS>, while the euro dropped 0.6 percent to 1.2945 franc
<EURCHF=EBS>.
"If events in the Middle East do escalate we will see safe
haven flows which will help the Swiss franc," said Kenneth
Broux, market economist at Lloyds.
Benchmark ten-year U.S. Treasury notes <US10YT=RR> were up
12/32 in price to yield 3.58 percent.
Unrest spreading across the oil-rich Middle East and North
Africa stoked fears of a disruption of oil flows.
Brent crude for April delivery <LCOc1> earlier climbed
above $104 a barrel, before retreating to trade down 20 cents
at $103.58. U.S. crude for March delivery <CLc1> rose 35 cents
to $85.35 a barrel.
"All in all, the pace of change sweeping the region is
truly mind-boggling, and we find it unlikely oil prices will
settle any time soon as long as this kind of upheaval continues
to spread," said Edward Meir, senior commodity analyst at
brokers MF Global.
Worries about Middle East unrest weighed on U.S. stocks
earlier, although bargain hunters quickly rush in and pushed
stocks back to near multi-year highs.
The Dow Jones industrial average <> was last up 10.37
points, or 0.09 percent, at 12,298.62. The Standard & Poor's
500 Index <.SPX> rose 2.22 points, or 0.17 percent, to
1,338.58. The Nasdaq Composite Index <> gained 6.28
points, or 0.22 percent, to 2,831.83.
Wall Street stocks also came under pressure earlier after
the United States reported the fastest rise in core consumer
prices in more than a year in January.
"The rise in CPI wasn't that huge, but in this environment
everyone is hyper-sensitive to any inflation," said T.C.
Robillard Jr., senior research analyst at Signal Hill in
Baltimore. "Even being a touch higher will have the inflation
hawks nervous."
European shares <> hovered near a 29-month closing
high. World equities measured by the MSCI All-Country World
Index <.MIWD00000PUS> last traded up 0.51 percent at 346.71.
The index had earlier climbed to its highest level since August
2008 on strong corporate earnings.
The euro edged higher versus the dollar as solid demand at
a Spanish debt auction offset broader euro zone banking and
sovereign debt concerns. It last traded up 0.3 percent at
$1.3608 <EUR=EBS>.
(Additional reporting by Edward Krudy, Karen Brettell in New
York, Lucia Mutikani in Washington and Dominic Lau in London)
