* European shares up 1.8 percent, Wall Street set for
positive start
* Oil rises above $50 on Gaza, Russia-Ukraine worries
* Dollar climbs against major currencies
By Jeremy Gaunt, European Investment Correspondent
LONDON, Jan 6 (Reuters) - Investors bet on a global economic
recovery on Tuesday, lifting European and Asian shares for the
sixth and seventh consecutive sessions respectively, while
political events drove oil above $50 a barrel.
Wall Street looked set for a positive start and the dollar
climbed strongly against major currencies, particularly the
euro.
Expectations that U.S. President-elect Barack Obama will
offer $310 billion in tax cuts as part of a $775 billion plan to
support the economy have fed into a tentative recovery in global
equity markets.
German politicians also debated tax cuts to revive Europe's
largest economy. []
The pan-European FTSEurofirst 300 <> index of top
European shares was up 1.8 percent. It has now gained around 18
percent since hitting a low in late November.
"The main things are the Obama plans as well as the German
fiscal stimulus package," said Bernard McAlinden, market
strategist at NCB Stockbrokers. "Markets, rather than focusing
on the dire economic and earnings data, are looking forward to
the hope that these plans will work."
In Japan, the Nikkei 225 <> closed up 0.4 percent and
the MSCI index of Asia-Pacific stocks <.MIASJ0000PUS> outside
Japan edged up for a seventh straight day, gaining 0.48 percent.
Higher oil prices helped boost energy stocks, but sharp
gains may cause some headline inflation problems later for
central banks intent on cutting interest rates.
Crude hit a one-month high above $50 a barrel, driven higher
by heightened concern about supply disruptions stemming from
Israel's incursion into Gaza and a dispute between Russia and
Ukraine over natural gas.
"Oil prices continue to be supported by political issues,
whether they be gas or Gaza related," Rob Laughlin, broker at MF
Global, said.
U.S. crude prices <CLc1> rose $1.25 to $50.06 a barrel
after gaining 5 percent overnight.
DOLLAR SURGES
The dollar jumped nearly 1.5 percent against a basket of
currencies <.DXY>, particularly gaining against the euro, which
fell sharply on speculation the European Central Bank will cut
interest rates further as price pressures ease and euro zone
economies weaken.
"With the situation in Europe deteriorating quite rapidly it
leaves the euro quite vulnerable," said Ian Stannard, senior
currency strategist at BNP Paribas in London.
The euro <EUR=> fell around 1.9 percent to $1.3351 according
to Reuters data. Against the yen, the dollar rose 0.7 percent to
94.08 yen <JPY=>.
On euro zone government bond markets, the interest
rate-sensitive 2-year Schatz yield <EU2YT=RR> was flat at 1.694
percent, while 10-year Bund yields <EU10YT=RR> were up 4 basis
points at 3.058 percent.
(Additional reporting by Joanne Frearson and Veronica Brown,
editing by Patrick Graham)
