5 Min Read
* U.S. stocks rally; world stocks higher
* Brent crude oil falls on hopes for end to Libya conflict
* Gold sets record high again near $1,900 an ounce (Updates, adds details)
NEW YORK, Aug 22 (Reuters) - Stocks rose above recent 11-month lows and Brent crude oil fell on Monday as Libya's civil war appeared to be nearing an end.
Gold prices rose, but were off record highs near $1,900 an ounce earlier in the day, and U.S. Treasuries fell.
The more than 1 percent bounce in U.S. stocks follows four weeks of losses. Gains were broad-based, with shares of Caterpillar (CAT.N) up 2.4 percent at $81.87.
Persistent worries that the sovereign debt crisis in euro zone peripheral countries may spread to the larger economies in the region have kept investors on edge.
The cost for euro zone banks to borrow money from one another rose again on Monday, heading back toward their highest levels since late 2008, as U.S. banks remained wary of lending to European counterparts in the face of the intractable debt crisis. For details, see [ID:nL5E7JM1B5]
Brent crude fell by more than a dollar as investors anticipated the resumption of oil exports from OPEC-member Libya. U.S. crude oil CLc1, however, rose less than $1 a barrel.
"Brent is taking more of a battering but that's only to be expected," said Christopher Bellew, a trader at Jefferies Bache. "The divergence is just another graphic example of the dislocation between (U.S. crude) WTI and Brent."
The potential for a restart of Libyan oil flows into the market if the Gaddafi regime collapses weighed on the benchmark oil price. If Libyan production comes back it would ease gasoline prices, potentially boosting economies worldwide as disposable income increased.
Libyan government tanks and snipers put up scattered resistance in Tripoli after rebels swept into the heart of the capital, cheered on by crowds hailing the end of Muammar Gaddafi's 42 years in power. [ID:nL5E7JL0LD]
On Wall Street, the Dow Jones industrial average .DJI was up 150.19 points, or 1.39 percent, at 10,967.84. The Standard & Poor's 500 Index .SPX was up 16.00 points, or 1.42 percent, at 1,139.53. The Nasdaq Composite Index .IXIC was up 41.16 points, or 1.76 percent, at 2,383.00.
The benchmark MSCI world equity index .MIWD00000PUS gained 0.8 percent on Monday but has fallen for five weeks in a row and looks to be heading for its worst monthly performance since October 2008, when markets were reeling after the collapse of Lehman Brothers. European stocks .FTEU3 rose 1.6 percent.
Some investors are hoping for the Federal Reserve to announce a new form of stimulus, not long after pleading to keep interest rates "exceptionally low... at least through mid-2013."
"This month has been about a lack of confidence, and if (Fed Chairman Ben) Bernanke announces the injection of additional stimulus, that will give the markets confidence that something is being done, which should at least decrease some of the volatility we've been seeing," said Tim Speiss, head of personal wealth advisors at EisnerAmper in New York.
Additional bond purchases by the Fed could help reflate asset prices, but many view the chances of a third round of quantitative easing as limited and expect the Fed to take gradual measures to boost the economy.
The speculation caused the dollar to slip. The U.S. currency .DXY was down 0.1 percent against a basket of major currencies. The euro EUR= traded 0.2 percent higher at $1.4424.
The benchmark 10-year note US10YT=RR was last down 17/32 in price, yielding 2.12 percent versus Friday's close of 2.06 percent.
In commodities, Brent crude LCOc1 was down $1.41 to $107.21.
Gold hit a third consecutive all-time high after staging its biggest weekly gain in 2-1/2 years last week. Spot gold XAU= was up 0.7 percent at $1,871.79 an ounce.
(Additional reporting by Ryan Vlastelica in New York and Claire Milhench in London) (Reporting by Caroline Valetkevitch and David Gaffen, ; Editing by Theodore d'Afflisio)