* World stocks hit year high
* Oil above $65 a barrel
* Dollar sinks to 5-month low
By Jeremy Gaunt, European Investment Correspondent
LONDON, May 29 (Reuters) - World stocks posted a new 2009
high on Friday, hitting levels last seen six months ago, and the
dollar sank to a five-month low against major currencies on
hopes the global economy has seen the worst of its downturn.
Wall Street looked set to join the rally. Commodity prices
also gained, with oil at a six-month high just below $66 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 1 percent,
having hit 245.40, its highest level since late October. The
index has gained nearly 43 percent since a global stock market
rally began in March.
Emerging markets stocks <.MSCIEF> were also at year highs.
The pan-European FTSEurofirst 300 was up 1.1 percent and
Japan's Nikkei average closed up 0.75 percent at a more than
seven month high.
Stock markets have been rising since March, although there
had 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 1.4 percent at $972 an ounce for a
near 10 percent gain on the month.
DOLLAR DOWN
Some of the rise in commodity prices, however, is linked to
the fall in the dollar, which hit a five-month low against a
basket of currencies.
Signs 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 1 percent to above $1.40 and the dollar sank 1
percent to less than 96 Japanese yen.
Higher-yielding currencies were big gainers as befits a mood
of risk appetite. The New Zealand dollars gained nearly 1.7
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 Mike Peacock)
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