(Corrects oil price in headline)
By Jeremy Gaunt, European Investment Correspondent
LONDON, May 19 (Reuters) - Equities began the week on a
positive note on Monday, overcoming worries about heady oil
prices above $126 a barrel.
The dollar slipped and euro zone government bonds rose
slightly.
Oil stayed pricey with U.S. light crude for June delivery
<CLc1> steady around $126.30 a barrel, about $1.50 shy of a
record high near $128 a barrel hit last week.
"The market still has a bullish leaning because of a weak
dollar and fuel supply concerns," said Sydney-based David Moore,
a commodity analyst at the Commonwealth Bank of Australia.
Rising oil prices -- combined with gains in other
commodities -- have raised concerns about global inflation,
adding essentially a new wall of worry to the ones built around
the subprime crisis and an ailing U.S. economy.
European Central Bank President Jean Claude Trichet warned
earlier in the day that the world was experiencing an "ongoing
and very significant market correction" and said policymakers
should make price stability their top priority.
He said inflationary pressures were being added to by an
accumulation of oil price rises and food price rises, adding:
"These are demanding times, challenging times."
Others were more bullish. Deutsche Bank <DBKGn.DE> Chief
Executive Josef Ackermann said in a newspaper interview over the
weekend that the end of the credit crisis is getting closer and
the U.S. real estate market should recover in the second half of
the year.
On a global basis <.MIWD00000PUS>, equity markets put in
modest gains while MSCI's main emerging market stock index
<.MSCIEF> was closing in on its 2007 closing level, meaning it
is near recouping all this year's losses.
STOCKS GAIN, DOLLAR SLIPS
European stocks were on a four-day winning streak with the
FTSEurofirst 300 <> index of top European shares up 0.2
percent.
"The market is holding on to gains we have seen over the
past week," Achim Matzke, European stock indexes analyst at
Commerzbank, in Frankfurt.
Earlier, Japan's Nikkei stock average <> rose 0.4
percent to hit a four-month closing high.
The benchmark is now up 22 percent from the year-low hit on
March 17, but is still about 6 percent below this year's highest
point touched in early January.
It rose 50.13 points to end at 14,269.61, the highest close
since Jan. 10. The broader Topix index <> added 0.6 percent
or 8.38 points to 1,404.25.
On currency markets, the dollar fell to its lowest in two-
and-a-half weeks versus the euro following last Friday's slide
after a drop in U.S. consumer confidence.
The euro rose to its highest since May 1 at $1.5602
according to Reuters data <EUR=>.
The dollar was steady at 72.725 against a basket of
currencies, not far off a low since the start of the month of
72.687 set on Friday <.DXY>.
Euro zone government bond prices rose. The 10-year yield
<EU10YT=RR> was down 1 basis point at 4.164 percent while the
2-year was down 2 basis points at 3.971 percent.
(Editing by Stephen Nisbet)
