March 25, 2011 / 4:33 PM / 8 years ago

GLOBAL MARKETS-Stocks gain on economy bets, euro slips

* World stocks firm, on track for best week so far in 2011

* Australian dollar hits 2-yr high vs greenback

* Portugal 10-year yield at euro-era high

* Oil, gold steady, watching Mideast, Libya (Recasts, updates prices; adds analyst quotes)

By Rodrigo Campos

NEW YORK, March 25 (Reuters) - Global stocks rose on Friday and were on track to post their best week since November, while the euro slipped against the dollar on increasing concern about the worsening debt crisis in Portugal.

U.S. stocks advanced after an optimistic outlook by software maker Oracle fueled hopes that a global resurgence in technology spending remained intact. However, volume remained weak.

“Oracle shows IT spending continues to be strong,” said Michael Quigley, tech analyst at Wedgewood Partners in St. Louis. “The whole software chain seems to be doing well.”

U.S. equities are leading global stocks and setting up to close their best week of the last 20, albeit on thin volume.

“The market has bounced back a lot,” said Andrew Wilkinson, senior market analyst at Interactive Brokers Group in Greenwich, Connecticut. “We’re pulling into the weekend with a real rebound in risk appetite.”

The MSCI All-Country index .MIW0000PUS gained 0.4 percent and was on track to post its best week since early November.

Volume has dwindled in U.S. and other markets, including Europe, as violence in the Middle East and northern Africa, coupled with Japan’s natural disasters two weeks ago and its ongoing nuclear crisis, cloud the outlook for the global economic recovery.

The Dow Jones industrial average .DJI was up 84.46 points, or 0.69 percent, at 12,255.02. The Standard & Poor's 500 Index .SPX was up 9.11 points, or 0.70 percent, at 1,318.77. The Nasdaq Composite Index .IXIC was up 25.40 points, or 0.93 percent, at 2,761.82.

Portugal’s president consulted political leaders on Friday on whether to call a snap election after the Socialist prime minister resigned following parliament’s rejection of his reforms. The crisis could force Lisbon to request a bailout from the European Union and International Monetary Fund. For more, see: [ID:nLDE72N0NZ].

Portuguese bond yields hit new highs after Standard & Poor’s downgraded the country’s debt ratings and warned it could cut them again.

“For most of the week the market has treated Portugal as an isolated problem that will not spread to other parts of Europe but this sentiment is losing popularity very quickly,” said Kathy Lien, director of currency research at GFT in New York. She added that the downgrade prompted “the first major rejection of Portuguese assets.”

Still, Spain’s Prime Minister Jose Luis Rodriguez Zapatero said he did not fear contagion from a potentially prolonged period of political instability in Portugal. [ID:nLDE72O1EF]

Spain is considered by the markets as a likely candidate to be the fourth euro zone country to seek a bailout following Greece, Ireland and possibly Portugal.

The yield on 10-year Portuguese government bonds rose to a euro-era high above 8 percent, well above the level the government says is sustainable.

European shares rose on stronger signs on the economy and corporate results, but gains were tempered by the euro zone debt problems.

The euro EUR=EBS was last down 0.2 percent at $1.4128, having earlier hit a session low of $1.41133 on trading platform EBS.

The dollar index .DXY, a gauge of the greenback against a basket of major currencies, rose 0.3 percent, supported by revised U.S. GDP data.

The yen traded above 81 per dollar JPY=, a level it has clung tightly to all week since a rare coordinated intervention by leading central banks last Friday to curb its appreciation.

Higher-yielding currencies gained as the global economic outlook boosted risk appetite and on growing demand for dollar-funded carry trades.

The Australian dollar hit a fresh 29-year peak against the U.S. currency as traders said gains triggered a series of automatic buy orders. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ FX COLUMN-Return of the yen carry trade [ID:nL3E7EM1JX] Reuters polls on world stock markets: [ID:nLDE72K1HU] Graphic on world stock polls: r.reuters.com/juw68r European sovereign debt crisis: r.reuters.com/hyb65p Japan disaster in figures: r.reuters.com/ser58r ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

OIL, GOLD PREY TO MIDEAST

Both U.S. crude CLc1 and Brent LCOc1 were on track to post healthy weekly gains, though prices were little changed on Friday.

Investors were keeping a close eye on protests in Yemen, Bahrain and Syria.

“So long as ongoing problems in the Middle East continue to elevate risks of a further supply disruption, there is a strong likelihood of a price spike in the second quarter,” said J.P. Morgan analysts headed by Lawrence Eagles.

Spot gold held steady below the previous session’s record highs, as worries over euro zone’s debt crisis and Middle East turmoil supported sentiment. [GOL/]

Japan's Nikkei index .N225 rose 1.1 percent to post its best week since November as foreign investors scooped up battered shares. In the previous two weeks, the Nikkei had lost nearly 14 percent. (Additional reporting by Steven C. Johnson, Angela Moon, Wanfeng Zhou, Axel Bugge and Shrikesh Laxmidas; Editing by Dan Grebler)

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