(Recasts with U.S. markets, adds byline; changes dateline;
previous LONDON)
* World stocks at four-month high, lifted by energy stocks
* Dollar rises, bonds sag as data suggests no US recession
* Emerging market stocks at new high, wipe out 2008 losses
By Herbert Lash
NEW YORK, May 19 (Reuters) - World stocks rose to
four-month highs on Monday and emerging markets erased their
once-huge 2008 losses as crude oil and other commodity prices
traded near record highs and mining and energy shares rallied.
Oil eased from a fresh high hit on Friday but the
relentless rise in crude prices bolstered energy-related stocks
in Asia, Europe and the United States, where Exxon Mobil, the
largest publicly traded oil company, led a broad stock market
index higher.
An economic forecasting gauge that showed the U.S. economy,
while weak, has so far managed to avoid recession helped the
dollar rebound from a 2-1/2 week low against the euro. The
Conference Board's Leading Economic Indicators index showed a
slight April gain of 0.1 percent.
Euro zone government bonds fell, extending last week's
sharp decline, as persistent worries about inflation and gains
in stocks dulled the allure of safe-haven government debt.
U.S. Treasury debt prices erased early gains and fell into
the minus column as investors moved into U.S. equity markets,
where the Dow rose 1 percent. Growth-sensitive sectors such as
transport and technology showed solid gains.
Investors snapped up technology shares on hopes that
business spending will hold up, with shares of Oracle Corp
<ORCL.O>, the world's second-largest software maker, up 3.7
percent and among the top advancers on the Nasdaq.
Shares of big manufacturers, including Caterpillar Inc
<CAT.N>, also headed higher and Exxon contributed the most to
the Standard & Poor's 500 Index's upturn.
With energy prices heading higher recently and economy
still growing, investors looked for companies that can do well
in an inflationary environment.
"Many market participants are preparing for rising
inflation. They are looking for companies with strong pricing
power, which can easily pass on higher prices," said Markus
Steinbeis, head of European equities at Pioneer Investments in
Munich. Buying into the oil and mining is "one way of
protecting your portfolio from a higher inflation."
In early afternoon trading, the Dow Jones industrial
average <> was up 129.78 points, or 1.00 percent, at
13,116.58. The Standard & Poor's 500 Index <.SPX> was up 12.30
points, or 0.86 percent, at 1,437.65. The Nasdaq Composite
Index <> was up 16.88 points, or 0.67 percent, at
2,545.73.
The equity markets were buoyed early by comments from
officials in the euro zone's two largest economies were
optimistic.
Germany is more resilient to external shocks and could
build on strong first-quarter growth by taking advantage of
firmer domestic demand, the Bundesbank said.
French economic growth could exceed the government target
in 2008, even if it slows during the rest of the year, Economy
Minister Christine Lagarde said.
France is on track to meet a target of between 1.7 and 2
percent economic expansion in 2008, Lagarde said, while Germany
surprised analysts and grew 1.5 percent from January to March,
its strongest quarterly expansion since 1996.
Oil fell below session highs after OPEC's president said
the producer group would not call an early meeting and was
unlikely even at its September gathering to boost supply as the
world had enough oil.
U.S. light sweet crude oil <CLc1> fell 45 cents to $125.84
per barrel, off a record of $127.82 set on Friday. Earlier,
futures prices hit $127.77 before retreating.
Energy stocks featured prominently among the top weighted
gainers in Europe, with Total <TOTF.PA> rising 3.1 percent and
Royal Dutch Shell <RDSa.AS> up 3.2 percent.
Emerging market equities hit a new high for the year,
wiping out their 2008 losses in a new bout of investor
confidence.
MSCI's benchmark emerging market share index <.MSCIEF> rose
to a new 2008 high of 1250.99, wiping out all its losses this
year.
Asian shares hit a new four-month high as a relentless rise
in oil prices bolstered resource shares.
MSCI's measure of Asian stocks outside Japan
<.MIAPJ0000PUS> rose 0.4 percent, the sixth consecutive session
it has gained. The index earlier hit its highest level since
mid-January, but is still down about 5 percent for the year.
Tokyo's Nikkei average <> and shares in Taiwan <>
and Hong Kong <> gained less than 0.5 percent each.
