GLOBAL MARKETS-Rebounding commodities aid stocks; dollar up

 

* MSCI world equity index up 0.2 percent at 331.40

* Rebound in oil and commodities helps European stocks

* Dollar rises towards 7-month peak

By Natsuko Waki

LONDON, Aug 20 (Reuters) - Oil and commodities rebounded on Wednesday, helping world stocks climb after hitting their lowest level in almost two years the previous day, while the dollar rose close to this week's seven-month high.

Rising resource stocks helped European shares defy Tuesday's fall on Wall Street, where fears over the future of top U.S. mortgage firms Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) and dismal housing data dragged financial firms lower.

Oil rose above $115 a barrel -- after sliding more than $30 from its July record peak -- while gold rose above last week's nine-month low, driven by strong demand.

"We have seen really heavy demand over the last two weeks on the physical side," said Michael Kempinski, senior trader at Commerzbank, referring to gold. "The bounce-back is on the back of this high physical demand."

U.S. light crude CLc1 rose 0.5 percent to $115.17 a barrel. Gold <XAU=> rose to $812.80 an ounce.

The FTSEurofirst 300 index .FTEU3 rose 0.3 percent while the MSCI main world equity index .MIWD00000PUS gained a quarter percent, edging away from the previous day's low.

Helping sentiment, Chinese shares .SSEC rose as much as 7.6 percent thanks to speculation the government would introduce a stimulus package to boost the slowing economy.

"Bargain hunters have returned to the market on talks that a rescue package is on the way," said Francis Lun, general manager of Fulbright Securities in Hong Kong.

China must increase domestic spending to keep growth on track as the global economy weakens, Vice-Premier Li Keqiang said on Wednesday, identifying a need to increase household incomes and rural consumption.

FIRMER US

U.S. stock futures SPc1 were up around a third of a percent, indicating a firmer start on Wall Street later.  Continued...