* MSCI world equity index down 0.5 pct at 340.98
* Oil near highs; Gulf markets tumble on unrest fears
* Government bonds, Swiss franc rise
By Natsuko Waki
LONDON, March 2 (Reuters) - World stocks fell while the
safe-haven Swiss franc and government bonds rose on Wednesday as
concerns grew that high oil prices due to unrest in the Middle
East would weigh on the global economic recovery.
Saudi Arabia's stock markets hit a 22-month low, declining
for a 13th session, while Dubai stocks hit a 6-1/2 year low,
reflecting investor worries over planned protests in Saudi
Arabia.
Brent oil prices held near 2-1/2 year highs as the conflict
in Libya spurred fears that other oil producers in the Middle
East/North Africa region could face similar revolts.
"If crude prices are going to go up to $125 to $130 a barrel
then that more and more of the consumption expenditure in the
United States is going to have to be spent on gasoline and can't
be spent on other durable goods," said Koen de Leus, strategist
at KBC Securities Bolero in Brussels.
"That is going to weigh on economic recovery."
The MSCI world equity index <.MIWD00000PUS> fell 0.5
percent. The index is off 2.4 percent from its 30-month peak set
in February, but is still up 3 percent since the start of the
year.
The Thomson Reuters global stock index <.TRXFLDGLPU> lost
0.4 percent. U.S. stock futures <SPc1> pointed to a higher open
on Wall Street.
The FTSEurofirst 300 index <> fell 0.8 percent while
emerging stocks <.MSCIEF> dropped 0.4 percent.
MENA CONTAGION
Dubai's index <> fell 3.5 percent to hit its lowest
level since June 2004.
"We are seeing a significant elevation in risk premiums,
with investors revising their expectations for the region," said
Hashem Montasser, managing partner at Frontlane Capital, a
Dubai-based asset management firm.
"The earnings outlook is very unclear."
Saudi Arabia's benchmark index <.TASI> fell nearly 4 percent
at one point to a fresh 22-month low, having suffered its
biggest one-day loss in more than two years on Tuesday.
Activists have set up Facebook pages calling for protests on
Mar. 11 and 20. []
Selling on the largest Gulf Arab bourse picked up pace on
Tuesday after human rights activists said authorities had
detained a Shi'ite cleric, sparking fears of sectarian strife.
"This is going to be a bumpy ride for the MENA region and is
likely to take its toll on the rest of the world as well,
particularly for oil prices," said Turker Hamzaoglu, economist
at Bank of America Merrill Lynch.
Brent crude for April delivery <LCOc1> stood at $115.26 a
barrel, having closed on Tuesday at $115.42 -- its highest
finish since August 2008. U.S. crude oil <CLc1> gained 0.2
percent to $99.83 a barrel.
Safe-haven buying pushed German government bond futures
<FGBLc1> up 12 ticks, and lifted the Swiss franc by around 0.3
percent to 0.9259 per dollar <CHF=>.
The dollar <.DXY> hit a 3-1/2 month low against a basket of
major currencies as rising oil prices fuelled concerns about
U.S. growth.
The euro rose 0.4 percent to $1.3835 <EUR=>.
(Additional reporting by Harpreet Bhal and Carolyn Cohn;
Editing by Ruth Pitchford)
