GLOBAL MARKETS-Stocks, euro turn higher; oil holds near peak

                                
 * MSCI world equity index inches up 0.2 pct at 344.48
                                
 * Wall Street looks set to open higher; Brent oil rises
                                
 * Portugal sells two-year bonds, yields at euro-era highs
                                
 
                                
 By Caroline Copley
                                
 LONDON, March 9 (Reuters) - World stocks and the euro erased
early losses to trade higher on Wednesday after positive
corporate results and indications for a firmer start on Wall
Street outweighed concerns about high oil prices.
                                
 Portugal sold two-year bonds at auction, but its cost of
borrowing was the highest since it joined the euro and the
government said yields on its debt were unsustainable in the
long run without Europe-wide action. [ID:nLDE72814X]
                                
 Germany's flagship carrier Deutsche Lufthansa <LHAG.DE>
announced a bigger than expected 2010 dividend after a one-time
tax effect boosted its bottom line, sending its shares higher by
more than three percent. [ID:nLDE728182]
                                
 Lufthansa's results also reminded investors of healthy
corporate earnings in a global economy that is still expected to
grow at a reasonable rate of 4 percent this year.
                                
 "Appetite for risk has risen, which has been supporting
equities ... Overall, stocks are still relatively undervalued,"
said Francis Ailhaud, CEO of Groupama Asset Management, which
has 90 billion euros in assets under management.
                                
 World stocks as measured by the MSCI world equity index
<.MIWD00000PUS> and the Thomson Reuters global stock index
<.TRXFLDGLPU> rose 0.2 percent. The MSCI index is only ticks
away from its 30-month high hit in mid-February.
                                
 The FTSEurofirst 300 index <.FTEU3> was up 0.3 percent,
erasing earlier losses, while MSCI's emerging equity index
<.MSCIEF> also gained 0.3 percent.
                                
 Lufthansa said it would propose paying shareholders a
dividend of 0.60 euros per share, almost 40 percent more than
the Thomson Reuters I/B/E/S consensus of 0.43 euros.
                                
 U.S stock futures <SPc1> were up a quarter percent, pointing
to a higher open on Wall Street after strong gains on Tuesday.
                                
 Brent crude <LCOc1> rose 0.4 percent to $113.52 a barrel
after news that heavy fighting in Libya had forced the shutdown
of one of its biggest refineries.
                                
 U.S. crude <CLc1> briefly rose to $105.19 before turning 0.1
percent lower on the day, near this week's 2-1/2 year high.
                                
 Investors have been concerned that a recent spike in oil
prices may fan inflation and hurt the global economic recovery.
                                
 However, Reuters calculations show oil will have to reach as
high as $191 to wipe out world growth, based on the assumption
that a $10 percent rise in oil prices trims global growth by
around 0.5 percent.
                                
 
                                
 PORTUGAL IN FOCUS
                                
 Portugal's cost of borrowing at its two-year bond auction
<PTOTEGOE009=> rose to 5.993 percent from 4.086 percent in an
auction last September.
                                
 Filipe Silva, debt manager at Banco Carregosa in Porto said
Portugal's yield curve was almost flat, with investors failing
to determine the premium they should receive for each maturity.
                                
 "This happened in Greece and in Ireland before the
bailouts," he said. "We are still not at the levels that require
a bailout, but we are quickly approaching these levels."
                                
 Portugal's Treasury Secretary Carlos Pina said after the
auction that it did not need international aid which the market
sees as all but inevitable.
                                
 Markets have piled pressure on peripheral debt this week
with the yield on 10-year Portuguese government bonds
<PT10YT=TWEB> hitting a new euro lifetime high of 7.78 percent.
The cost of insuring Portugal's debt against default rose 14
basis points to 500 bps.
                                
 Spanish and Italian 10-year yield spreads versus benchmark
German Bunds hit their highest levels since mid-January. March
bund futures <FGBLC1> were steady.
                                
 The euro reversed early losses to rise 0.2 percent to
$1.3935 <EUR=> as doubts grew that Friday's European summit
would quell concerns about the region's fiscal problems.
                                
 The 17 heads of state are expected to agree on the next
cautious steps in their year-long effort to quell the region's
debt crisis but are unlikely to produce a breakthrough.
[ID:nLDE7280NF]
                                
 The U.S. <.DXY> dollar fell 0.3 percent against major
currencies.
 (Additional reporting by Kirsten Donovan in London and Blaise
Robinson in Paris; Editing by Catherine Evans)