RPT-GLOBAL MARKETS-Asian stocks hit 4-mth high; oil above $126

                                
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 (Updates with latest Asian prices, Europe's stocks
pre-opening)
                                
 By Rafael Nam
                                
 HONG KONG, May 19 (Reuters) - Asian shares hit a new
four-month high on Monday as a relentless rise in oil prices
bolstered resource shares, but wariness about inflation and
doubts about the U.S. economy kept gains in check.
                                
 The dollar was range-bound after its drop on Friday when it
was hit by data showing a plunge in U.S. consumer confidence to
a 28-year low, reinforcing concerns over the world's largest
economy.
                                
 European shares were set to gain for a fourth consecutive
session on the back of commodity-related stocks, after hitting
four-month highs on Friday. Britain's FTSE 100 <.FTSE> was seen
up 15 to 21 points, and the German DAX <.GDAXI> up 26 to 31
points, according to financial bookmakers.
                                
 Asian shares have rebounded around 21 percent since hitting
the year's low in mid-March, but record oil prices continue to
worry, despite the benefit to resource firms, given the
prospects of inflation at a time of slowing global economic
growth.
                                
 "It's basically all just commodities today, with the market
ignoring the long-term implications of the high oil prices such
as inflation, even though oil is really approaching dangerous
levels," said Koichi Ogawa, chief portfolio manager at Daiwa SB
Investments in Tokyo.
                                
 The MSCI broad measure of Asian stocks outside Japan
<.MIAPJ0000PUS> rose for a sixth consecutive session, and was
up 0.6 percent by 0600 GMT. The index hit earlier its highest
level since mid-January, but is still down about 5 percent down
for the year.
                                
 The index breached the key psychological 500-point level on
Friday, extending a recovery since mid-March on hopes the worst
of the credit crisis has passed and that earnings in Asia will
prove more resilient than expected.
                                
 Gains in Asian stocks on Monday were driven in large part
by resource firms such as Sydney-listed Woodside Petroleum Ltd
<WPL.AX> and Japanese trading firm Mitsubishi Corp <8058.T>,
though the overall advances were moderate.
                                
 Australian shares <.AXJO> rose 0.7 percent. Taiwanese
shares <.TWII> gained 1.1 percent to its highest close since
November 2007 on hopes for economic improvement after
president-elect Ma Ying-jeou takes office on Tuesday.
[ID:nTP365035]
                                
 Tokyo's Nikkei average <.N225> and shares in Taiwan <.TWII>
and Hong Kong <.HSI> gained less than 0.5 percent each.
                                
 But shares in South Korea <.KS11> fell 0.2 percent, while
Shanghai <.SSEC> lost 0.3 percent.
                                
 Several markets in Asia were closed on Monday for public
holidays, including in Singapore, India, Thailand and Malaysia.
                                
 OIL WORRIES
                                
 Concerns over tight fuel supplies led oil prices higher,
with U.S. light crude for June delivery <CLc1> up 41 cents at
$126.70 a barrel, near the record $127.82 hit on Friday.
                                
 Oil prices have risen six-fold since 2002 and doubled since
last year as strong demand from China and other developing
nations comes amid tightening production capacity.
                                
 "The (oil) market still has a bullish leaning because of a
weak dollar and fuel supply concerns," said Sydney-based David
Moore, a commodity analyst at the Commonwealth Bank of
Australia.
                                
 Gold also rose, with spot prices <XAU=> up at more than
$906 an ounce against $899.55 late in New York on Friday.
Prices of bullion in the prior session jumped above $900 to its
highest in three weeks, tracking higher oil prices and a weaker
dollar.
                                
 The dollar inched up 0.1 percent to 104.12 yen <JPY=>,
though the weakening trend seen this year remains intact.
                                
 The U.S. currency dropped on Friday on data showing the
Reuters/University of Michigan index of consumer confidence
dropped to 59.5 in May, the lowest since June 1980.
[ID:nN16406494]
                                
 Concerns abound about how central banks around the world
will deal with rising inflation at a time of slowing global
economic growth.
                                
 The Reuters Tankan, a monthly survey of Japanese
manufacturers, came in on Monday at minus 2 for May, marking
the first time in five years that leading firms in the world's
second-largest economy have turned pessimistic about business
conditions. [ID:nT162279]
                                
 The survey comes as the Bank of Japan is expected to keep
interest rates unchanged at 0.5 percent at its two-day meeting
that ends on Tuesday, with its hands tied by lingering
uncertainty over the global economy and worries about rising
energy costs. [ID:nT305710]
                                
 Japanese government bond futures climbed, pulling away from
a seven-month low hit last week, as dealers covered short
positions. The market remains volatile amid concerns about
global interest rates and the pullback of hedge funds and other
players.
                                
 June 10-year futures <2JGBv1> rose 0.42 point to 135.12.
 (Editing by Anshuman Daga)