GLOBAL MARKETS-Oil surges as dollar slips on Fed buying program

                                
 * U.S. stocks slip, investors fret about Fed bond program
                                
 * Dollar extends drop after biggest 1-day slide since 1985
                                
 * Bonds mostly rise on Fed's Treasury buying program
                                
 * Oil rises above $50 barrel on Fed's move, weak dollar
 (Recasts with U.S. markets, changes dateline; previous
LONDON)
                                
 By Herbert Lash
                                
 NEW YORK, March 19 (Reuters) - Oil jumped more than 6
percent on Thursday as the dollar extended losses as investors
worried that the Federal Reserve's plan to pump an additional
$1 trillion into the U.S. economy will eventually cause
inflation.
                                
 European and Asian shares rose in reaction to the Fed's
move on Wednesday to jump-start an ailing economy, but U.S.
stocks slipped on investors' unease about a program that will
flood the financial system with cash.
                                
 U.S. stocks rose on Wednesday after the Fed unveiled its
latest efforts to end the deepest recession since the early
1980s. Its plans call for the purchase of longer-term
government debt, which has not been seen since the 1960s.
                                
 While resurgent oil prices lifted energy shares, helping to
cushion the decline in U.S. stocks, investors fretted that the
Fed's action may stir inflation in the long term.
                                
 "It's not only what else can they do, but what are the
unintended consequences of all the things they are doing," said
Alan Lancz, president of Alan B. Lancz & Associates Inc, an
investment advisory firm based in Toledo, Ohio.
                                
 "When investors step back and look at the whole picture it
might not be as rosy to chase stocks here as some people seem
to be doing," Lancz said.
                                
 Shares of Chevron <CVX.N> rose 1.4 percent, the biggest
boost to the sliding Dow Industrials, and ConocoPhillips
<COP.N> jumped 3.4 percent. But Exxon Mobil <XOM.N> slid 0.9
percent.
                                
 Before 1 p.m., the Dow Jones industrial average <.DJI> was
down 73.36 points, or 0.98 percent, at 7,413.22. The Standard &
Poor's 500 Index <.SPX> fell 6.45 points, or 0.81 percent, at
787.90. The Nasdaq Composite Index <.IXIC> dropped 4.86 points,
or 0.33 percent, at 1,486.36.
                                
 European shares closed higher, with banks and commodities
taking the lead, but gains were capped as investors worried
about the worldwide implications of the Fed's program.
                                
 The pan-European FTSEurofirst 300 <.FTEU3> index of top
shares rose 0.6 percent to a close of 715.17 points, well away
from the session high of 730.22 points.
                                
 Financials were the major gainers, with Barclays <BARC.L>
rising 17.2 percent,
                                
 Gold jumped to a near three-week high and copper jumped 5
percent, cruising past $4,000 a tonne in London markets for the
first time in four months, as the Fed's move to spur growth and
battle a deepening recession boosted the outlook for demand.
                                
 The weaker dollar and rising European equities lifted
industrial metals. A weak U.S. currency makes metals priced in
dollars less expensive for holders of other currencies.
                                
 "We have for the time being a return to risk appetite in
the oil market and it's based on the Fed's announcement
yesterday," said analyst Mike Wittner of Societe Generale.
"That's having a positive impact on sentiment."
                                
 The dollar suffered its biggest daily plunge since at least
1985 on Wednesday after the Fed announcement.
                                
 The dollar slipped against a basket of major currencies,
with the U.S. Dollar Index <.DXY> down 1.57 percent at 82.874.
                                
 The euro <EUR=> rose 1.40 percent at $1.3694, and against
the yen, the dollar <JPY=> fell 2.0 percent at 93.93.
                                
 Treasury prices were mixed. The benchmark 10-year U.S.
Treasury note <US10YT=RR> rose 3/32 in price to yield 2.54
percent. The 2-year U.S. Treasury note <US2YT=RR> fell 1/32 in
price to yield 0.84 percent.
                                
 U.S. light sweet crude oil <CLc1> rose $3.03, or 6.29
percent, to $51.17 per barrel.
                                
 Spot gold prices <XAU=> rose $15.85 to $955.75 an ounce.
                                
 Stocks mostly rallied in Asia after the Fed announcement.
The MSCI Asia-Pacific stocks outside Japan <.MIAPJ0000PUS>
climbed .25 percent, but the Nikkei <.N225> average lost 0.3
percent.
 (Reporting by Ellis Mnyandu, Vivianne Rodrigues, Chris Reese
in New York and Joanne Frearson, Alex Lawler, Paul Lauener, Jan
Harvey, Michael Taylor and Rebekah Curtis in London; writing by
Herbert Lash; Editing by Leslie Adler)