* World stocks up 0.3 pct, set for 3rd monthly rise
* Copper rises; U.S. Treasury yields dip below 3.40 pct
* Dollar hits 3-mth low; Brent crude dips
By Dominic Lau
LONDON, Feb 28 (Reuters) - World stocks rose on Monday and
were on track to post their third straight month of gains,
although traders remained wary that sustained high oil prices
would hurt global growth.
The dollar fell to a three-month low on expectations that
the uncertain outlook, including firmer oil prices driven by
political unrest in the oil-producing Middle East and North
Africa, would keep U.S. monetary policy loose.
Oil prices reversed gains to trade slightly weaker, though
they have gained sharply this month on concerns over supply
disruption from the oil-rich region.
Copper prices extended the previous session's 3 percent
gains after an earthquake in top producer Chile, though
benchmark U.S. 10-year Treasuries were also in demand, sending
yields to below 3.40 percent -- their lowest in four weeks.
World equities measured by MSCI All-Country World Index
<.MIWD00000PUS> added 0.3 percent after rising 1.1 percent on
Friday. The global index is up 2.3 percent this month, on track
for a third straight monthly rise.
"The question is how high it (oil price) is going and how
permanent is the spike," said Nick Nelson, equity strategist at
UBS in London.
"If it's something that it's going to maintain itself for
six months, 12-months from this, obviously it's going to be much
more damaging for the economy than it is just something happens
for one or two weeks and then go back down again."
U.S. stock index futures <SPc1> <DJc1> <NDc1> were flat to
up 0.1 percent. Japan's Nikkei average <> rose 0.9 percent,
helped by a weaker yen.
Europe's FTSEurofirst 300 <> index was up 0.2 percent,
while Ireland's stocks <.ISEQ> slipped 0.4 percent.
Ireland's main opposition party said it would start urgent
talks on forming a new government in a bid to turn its landslide
election win into a mandate to renegotiate a bailout deal with
Europe.
According to fund tracker EPFR Global, a growing aversion to
risky assets in the latest week fuelled the biggest flows to
global bond funds in more three months, and turned more
investors away from emerging market stocks. []
Yields on benchmark 10-year U.S. Treasuries <US10YT=RR>
eased 1 basis point to 3.4069 percent on Monday after falling as
low as 3.3904 percent.
The rotation out of emerging markets into developed markets,
partly driven by inflation concerns in emerging economies, have
led to outperformance in developed markets. The MSCI emerging
market index <.MSCIEF> has lost 4.2 percent this year.
But Credit Suisse's private bank expected the fund rotation
to ease in the second quarter.
"As the current level of net foreign selling has already
reached the average size of foreign selling in the previous
non-recession corrections, we expect to see a gradual easing of
the DM versus EM rotation flows and redemption of EM and Asian
equity funds in the coming months, as foreign investors appear
to be getting close to capitulation point," it said in a note.
DOLLAR DOWN, OIL STEADY
The greenback was down 0.6 percent against a basket of major
currencies <.DXY>, its lowest since Nov. 9, as traders expect
higher oil prices would keep U.S. monetary policy loose.
"Rising oil prices help to widen the perceived policy
divergence between the Fed and other major central banks," said
Lee Hardman, currency analyst at BTM-UFJ.
"The ECB sees rising crude as an upside risk to inflation
rather than the Fed's view that it will be negative for growth.
This is increasing the risks of a near-term overshoot for the
euro." The euro was up 0.6 percent at $1.3862 <EUR=>.
Brent crude <LCOc1> dipped 0.3 percent after trading as high
as $114.50 a barrel on Monday. U.S. crude futures <CLc1> were
steady at below $98 a barrel, paring earlier gains.
Revolt in Libya has cut as much as three quarters of the
OPEC member's output, prompting Saudi Arabia to step in and plug
the supply gap to Libya's oil buyers.
Brent crude is up more than 10 percent this month, heading
towards its sixth straight month of rises. It touched a 29-month
high of near $120 a barrel last week.
Copper <CMCU3> rose for the third day and is up 0.5 percent
this month, on track for its eighth month of gains.
(Additional reporting by Neal Armstrong in London, Florence Tan
in Singapore; Editing by Ruth Pitchford/Toby Chopra)
