* MSCI world shares poised for best weekly run in two years
* Wall St up for third day
* Oil hits 2016 high on output freeze hope
(Adds U.S. market open, byline, dateline; previous LONDON)
By Herbert Lash
NEW YORK, March 18 (Reuters) - World equity markets were
poised for a fifth week of gains on Friday, their best run in
more than two years, as a 2016 high for oil, the dollar's recent
decline and a more optimistic view of the economy combined to
boost investor confidence.
Stocks in Europe gained and Wall Street rose for a third day
as the dollar steadied after a third week of declines that took
it to its lowest against other major currencies .DXY since
October.
The dollar had weakened earlier in the week after the U.S.
Federal Reserve scaled back its forecasts for rate increases. On
Friday, the European Central Bank's chief economist, Peter
Praet, indicated the ECB could further loosen monetary policy.
A rising dollar in 2015 weighed on the global economy while
its recent decline has helped push up oil prices and put an end
to market concerns over a soaring dollar and weak oil prices,
said David Kelly, chief market strategist at JPMorgan (NYSE:JPM) Asset
Management in New York.
"People have woken from a nightmare," Kelly said, referring
to market turmoil in January and February. Given how low bond
and cash yields are, it's hard not to buy stocks, he said.
"To me the anomaly here is not that the economy isn't doing
well, it's that bond valuations are priced for a depression," he
said.
MSCI's all-country world index .MIWD00000PUS , a gauge of
equity performance in 46 countries, rose 0.21 percent. The index
is set for its best five-week rally since early 2014.
The pan-European FTSEurofirst 300 index .FTEU3 of leading
regional shares rose 0.24 percent.
On Wall Street, the Dow Jones industrial average .DJI rose
86.43 points, or 0.49 percent, to 17,567.92. The S&P 500 .SPX
added 6.28 points, or 0.31 percent, to 2,046.87 and the Nasdaq
Composite .IXIC gained 6.42 points, or 0.13 percent, to
4,781.40.
Oil rose above $42 a barrel, hitting its highest this year
and extending a rally into a fourth week, on expectations of a
production freeze by major exporters, stronger seasonal demand
and dollar weakness.
Brent crude's front-month contract LCOc1 was up 64 cents,
or 1.5 percent, at $42.18 a barrel after touching a 2016 high of
$42.54.
U.S. crude CLc1 gained 52 cents to $40.72 a barrel.
Oil prices have surged by more than 50 percent from 12-year
lows hit in December after the Organization of the Petroleum
Exporting Countries (OPEC) toyed with a production freeze that
lifted Brent from about $27.
The dollar index recovered from a five-month low but was
still on track for a third straight week of losses, as investors
cut favorable bets after the Fed appeared cautious about raising
interest rates at a steady pace this year.
The dollar was mostly flat against the yen, having hit a
17-month low on Thursday, with traders worried that a sharp rise
in the Japanese currency would elicit intervention from the Bank
of Japan.
The dollar traded at 111.36 yen JPY= , off a low of 110.67
plumbed on Thursday.
The benchmark U.S. Treasury note US10YT=RR rose 9/32 in
price to yield 1.8732 percent.
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Currencies vs dollar http://link.reuters.com/tak27s
Oil prices http://link.reuters.com/beb23v
Commodities performance http://link.reuters.com/rac73w
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(Editing by Bernadette Baum)