* World stocks near year high
* Oil above $65 a barrel
* Dollar sinks towards 5-month low
By Jeremy Gaunt, European Investment Correspondent
LONDON, May 29 (Reuters) - World stocks closed in on a new
high for the year and the dollar sank towards a five-month low
against major currencies on Friday on hopes that the global
economy has seen the worst days of its downturn.
Commodity prices also were gaining, with oil at a six-month
high above $65 a barrel.
"We're back to the pro-risk theme, as markets continue to
anticipate growth to return in the second half of the year,"
said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi
UFJ.
MSCI's all-country world stock index was up 0.7 percent,
just shy of its 2009 peak, which would be a six-month high.
The pan-European FTSEurofirst 300 was up 1 percent and
Japan's Nikkei average closed up 0.75 percent at a more than
seven month high.
Emerging shares <.MSCIEF> hit a fresh 2009 high, up over 1
percent to their highest level since October.
Stock markets have been rising since March, although there
have been some signs recently of an easing off in gains.
Hopes for a second-half recovery in the global economy,
however, have been fanning demand for riskier assets and those
tied to growth.
The Reuters-Jefferies CRB index, a global commodities
benchmark, is up 12.3 percent for the month, on its way to the
biggest monthly gain since July 1974.
"Gains in commodities reflect continued recovery of demand
outlook from its collapse after Lehman's bankruptcy triggered
concerns of a depression," said Dariusz Kowalczyk, chief
investment strategist with SJS Markets in Hong Kong.
"Medium-term outlook remains positive for commodities and
other risky asset classes as we continue to expect that U.S. GDP
will start to expand in Q3 and several major Asian economies
already in Q2," he said in a note.
Spot gold <XAU=> was up 1 percent at $967 an ounce for a
more than 9 percent monthly gain, which also could reflect some
caution among investors.
DOLLAR DOWN
Some of the rise in commodity prices, however, is linked to
the fall in the dollar, which slipped towards a five-month low
against a basket of currencies.
Signs that the global recession may have passed its worst
has reignited concern about ballooning U.S. government debt and
prompted investors to sell the safe-haven currency.
The euro rose half a percent to above $1.40 and the dollar
sank a third of a percent to 96.6 Japanese yen.
Higher-yielding currencies were big gainers as befits a mood
of risk appetite. The New Zealand dollars gained nearly 1
percent against its U.S. counterpart.
Yields on euro zone government bonds fell despite the stock
gains.
"Euro zone supply is out of the way ... maybe there's a bit
of a chance of an end of week recovery," said a trader in
London. "There's a fair bit of data so there's a danger that
U.S. data comes out on the strong side again and knocks things
down.
(Additional reporting by Tamawa Desai, editing by Toby Chopra)
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