* European stocks track Wall Street, Asian equities up
* Oil above $112 on MidEast supply concerns
* Dollar index near 3-1/2-month low
By Emelia Sithole-Matarise
LONDON, March 1 (Reuters) - Oil prices rose back above $112
a barrel on Tuesday due to concerns over unrest in the Middle
East, though stock markets shrugged off the move, preferring to
focus on optimism over the outlook for the U.S. economy.
The upheaval in the Middle East and North Africa helped spot
gold to rise about 0.3 percent to $1,414.20 an ounce, aiming for
its third straight day of gains.
But European equities tracked gains on Wall Street overnight
and in Asia, with analysts saying markets had turned back to
hopes of a strong recovery in the United States and the prospect
of monetary tightening there being delayed for some time.
Data on Monday showed U.S. consumer spending growth slowed
in January but also painted a bullish picture of the
manufacturing sector, with with a gauge of factory activity in
the country's Midwest hitting a 22-1/2 year high.
"It's very important that the U.S. economy is now showing
signs of strength ... and forecasts for this year's GDP are
starting to exceed 4 percent," said Heino Ruland, strategist at
Ruland Research in Frankfurt.
"This is certainly good news for the world economy."
Figures out of China, however, showed manufacturing growth
slowed in February while costs jumped, suggesting monetary
tightening was beginning to register but that more would
probably be needed to cool inflation due largely to rising oil
and food prices. []
U.S. crude for delivery in April <CLc1> inched up 0.2
percent to $97.24 per barrel.
The pan-European FTSEurofirst 300 index was last up 0.8
percent. The world equities measured by MSCI All-Country World
Index <.MIWD00000PUS> added 0.5 percent.
OIL OFF PEAKS
Crude traded close to $120 per barrel last week, its highest
in more than two years, due to concerns that political upheaval
in Libya would spread across oil-producing nations in the Middle
East. Saudi Arabia has calmed the market with extra supply.
"I would expect that the rise in oil prices we've seen so
far, which is more gentle compared to what we saw in the 1970s
and '80s, the impact on the economy will be negative but maybe
not as negative as we have seen in the past," said Elwin de
Groot, market economist at RBC Capital Markets.
"The rise comes against the backdrop of very strong profits
in the past quarters, so we need to see bigger events before the
market is significantly dented by that. Still, there is always a
risk that this will have a bigger impact on the global economy
if things worsen."
The dollar index <.DXY>, which tracks its performance
against a basket of major currencies, hit a 3-1/2 month low of
76.756, before recovering slightly to 76.827.
The euro hovered close to its 2011 high of $1.3862 against
the dollar and traders said a catalyst for more gains could come
if Federal Reserve chief Ben Bernanke suggests in Tuesday
testimony it will continue to run extremely loose monetary
policy.
Bernanke is expected to stay cautious about the economy in
the semi-annual testimony before the Senate Banking Committee at
1500 GMT, in contrast with other central banks who are focused
on rising inflation.
"The euro could test or break its 2011 highs if Bernanke
suggests Fed policy will continue to be extremely
accommodative," said Roberto Mialich, currency strategist at
Unicredit in Milan.
(Additional reporting by Jessica Mortimer)
