* MSCI world equity index down 0.5 percent at 337.88
* Gold, oil and other commodities slump as dollar surges
* Emerging stocks underperform developed equities
By Natsuko Waki
LONDON, Aug 15 (Reuters) - A fresh surge in the dollar drove
commodities lower on Friday, knocking gold and oil prices and
weighing on world stocks as evidence mounted that U.S. economic
problems are spreading to the rest of the world.
The dollar struck a fresh six-month high against major
currencies as shrinking economies in the euro zone and Japan
contrasted with resilient growth in the United States.
This helped push oil below $114 a barrel while gold fell
below $800 an ounce to a 2008 low. Other commodities from silver
to vegoil tumbled as evidence of economic weakness fanned
concerns that demand would weaken.
Weakening commodities had a mixed effect on equities with
European and Japanese bourses gaining while emerging stocks fell
back towards this week's one-year low.
"The bears are back in town. They are here in full force and
doing lots of damage. It's going to be a pretty ugly Friday and
Monday," said Edward Meir, MF Global analyst in Singapore,
referring to broader moves in commodity markets.
"The root causes are many, but beyond the macroeconomic
triggers, the immediate reason for the slide is the dollar."
Gold <XAU=> fell as low as $773.90 an ounce, its lowest
since December, while silver <XAG=> and spot palladium <XPD=>
lost 5 percent on the day.
Reuters-Jefferies CRB index <.CRB>, a global index of
commodity prices, fell on Wednesday towards this week's
four-month low, having posted their biggest monthly loss in 10
years last month.
U.S. light crude <CLc1> was down 1.5 percent at $113.23 a
barrel, nearly $35 below its record peak hit only last month.
"Demand is a key driver here," said Daniel Brebner, global
head of commodities at UBS. "The key concerns are over Western
economies, perhaps more importantly emerging economies and
predominantly China -- where growth has been slowing."
Illustrating emerging weakness in still-resilient China,
Hong Kong's economy unexpectedly shrank in the second quarter,
posting its worst performance since the height of the SARS
outbreak in 2003.
GOLDMAN BACKS DOLLAR
The dollar rose as high as $1.4700 per euro <EUR=>, a
six-month high, raising speculation that the move might mark the
beginning of an end to the U.S. currency's seven-year downtrend.
The greenback hit a 22-month peak against sterling <GBP=> of
$1.8514.
"The dollar has bottomed!" Goldman Sachs said in a note to
clients.
"The rapid weakening of OECD growth outside the U.S., a
clear technical break in many dollar crosses and much lower oil
prices are powerful signs of improving dollar fundamentals."
Data this week showed the euro zone joined Japan to move
half way into a recession -- technically defined as two
successive quarters of growth contraction -- after their gross
domestic product fell in the second quarter.
The MSCI main world equity index <.MIWD00000PUS> slipped 0.5
percent, driven by weakness in emerging stocks <.MSCIEF> which
fell 0.85 percent towards this week's one-year low.
The FTSEurofirst 300 index <> rose half a percent as
investors took heart from falling oil and commodity prices --
which would lead to lower costs for corporates.
U.S. stock futures <SPc1> rose 0.3 percent, pointing to a
firmer start on Wall Street later.
Emerging sovereign spreads <11EMJ> tightened 2 basis points.
Government bonds attracted safe-haven demand, with the
September Bund future <FGBLU8> rising 12 ticks.
(Additional reporting by Hymeyra Pamuk; Editing by Victoria
Main)
