* U.S. crude climbs more than 6 pct
* Major U.S., European indexes up over 1 pct
* Sterling hits seven-year low vs dollar
* U.S. yields up as risk appetite lowers debt demand
(Updates with afternoon trading)
By Lewis Krauskopf
NEW YORK, Feb 22 (Reuters) - Global stocks rallied on
Monday, backed by a rise in oil and commodity prices, while the
British pound suffered its biggest one-day loss in nearly six
years against the dollar on fears Britain would leave the
European Union.
Sterling tumbled to a near seven-year low during the session
after popular London Mayor Boris Johnson said he would campaign
to leave the EU ahead of a June 23 referendum. The euro also
endured its biggest single-session decline since
November.
Battered oil prices jumped as speculation about falling U.S.
shale output helped feed the notion that crude prices may be
bottoming after their 20-month collapse.
Benchmark Brent LCOc1 settled up 5.1 percent to $34.69 a
barrel, while U.S. crude settled up 6.2 percent at $31.48 a
barrel.
Stocks, whose performance has been tightly linked to oil
prices as the commodity's slide has deepened, posted solid gains
across major markets.
"Driving everything has been the recovery in energy and
commodity prices," said Rick Meckler, president of LibertyView
Capital Management in Jersey City, New Jersey. "That has been
the part of the market that investors have been most concerned
with so seeing a rally, particularly in oil, has been taken
positively."
The Dow Jones industrial average .DJI was rising 213.4
points, or 1.3 percent, at 16,605.39, the S&P 500 .SPX was
gaining 23.72 points, or 1.24 percent, at 1,941.5 and the Nasdaq
Composite .IXIC was adding 60.49 points, or 1.34 percent, at
4,564.92.
All 10 major S&P sectors were higher, led by a 2 percent
increase for the energy .SPNY sector.
The gains built on last week's strong performance after a
poor overall start for U.S. equities in 2016.
"The fact that we held it on Friday and then went through a
weekend and sustained and advanced it even more, I think is
building optimism and maybe we've turned a corner," said Jim
Paulsen, chief investment officer at Wells Capital Management in
Minneapolis.
The pan-European FTSEurofirst 300 share index .FTEU3 rose
1.7 percent. Mining stocks were among the best performers, with
Anglo American AAL.L rising 10.8 percent, as the price of
copper CMCU3 reached a two-week high.
Helped by mining shares, Britain's FTSE 100 index .FTSE
rose 1.5 percent, despite concerns over a possible EU exit.
Stocks shrugged off a survey showing private sector business
activity in the euro zone increased at its weakest pace in more
than a year in February.
MSCI's index of world shares .MIWD00000PUS rose 1.2
percent.
Worries about a possible British exit from the EU sent the
euro down 1 percent against the dollar. Sterling fell 1.8
percent against the greenback and dropped as low as $1.4057.
"A Brexit would be bad for sterling, but it would also be
bad for the euro," said Neil Jones, Mizuho's head of hedge fund
sales in London.
The dollar was up 0.8 percent against a basket of six
currencies .DXY .
U.S. Treasury yields rose as rising stock and oil prices
reduced demand for safe haven debt, ahead of an expected
government sale of $88 billion in new short- and
intermediate-dated debt this week.
Benchmark 10-year Treasuries US10YT=RR were last down 5/32
in price to yield 1.7639 percent.
Zinc prices CMZN3 surged to a four-month peak and other
base metals also gained as investors' appetite for risk
increased while they also worried about potential shortages.
Gold XAU= fell 1.6 percent as the dollar strengthened and
investor appetite for risk increased.