* European stocks track Wall Street, Asian equities up
* Oil above $112 on MidEast supply concerns
* Dollar index near 3-1/2-month low
(Adds detail, updates prices)
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 0.5 percent to $1,417.85 an ounce, up for a
third straight session. Gold staged its largest monthly rise in
February since last August, as turmoil in the Middle East fed
investor demand for perceived safe-haven assets.
But European equities tracked gains on Wall Street overnight
and in Asia, with analysts saying markets had turned back to
expectations of a strong U.S. recovery and the prospect of
monetary tightening there being delayed for some time.
U.S. factory activity is forecast to have expanded again in
February. The Institute for Supply Management index due later in
the day is expected to show a reading of 61.0, up from 60.8 in
January. []
This follows data on Monday showing consumer spending growth
slowed in January but also painting a bullish picture of the
manufacturing sector, 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 0.1
percent to $97.08 per barrel.
The pan-European FTSEurofirst 300 index was last up 0.4
percent, pushing higher for a third consecutive session. The
world equities measured by MSCI All-Country World Index
<.MIWD00000PUS> added 0.3 percent.
The firmer tone in equities cooled flows into safer-haven
government bonds, pushing 10-year Treasury and German debt
yields up slightly though losses were limited by lingering
nervousness over developments in North Africa and the Middle
East.
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."
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Graphic showing oil price shocks: http://r.reuters.com/qes28r
Calculator: Oil price impact on GDP http://r.reuters.com/jux28r
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The dollar index <.DXY>, which tracks its performance
against a basket of major currencies, hit a 3-1/2 month low of
76.735, before recovering slightly to 76.842.
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 the central bank will continue to run extremely loose
monetary policy.
The euro was also supported by expectations of a hawkish
European Central Bank message when it meets on Thursday, after
the euro zone's growth and inflation forecasts were revised
upwards. [].
In contrast, Bernanke is expected to stay cautious about
the economy in the semi-annual testimony before the Senate
Banking Committee at 1500 GMT.
(Additional reporting by Harpreet Bhal; editing by Stephen
Nisbet)
