World stocks closed in on a new high for the year and the dollar sank toward a five-month low against major currencies on Friday on hopes that the global economy has seen the worst days of its downturn.

Commodity prices also were gaining, with oil at a six-month high above $65 a barrel.

We're back to the pro-risk theme, as markets continue to anticipate growth to return in the second half of the year, said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.

MSCI's all-country world stock index was up 0.7 percent, just shy of its 2009 peak, which would be a six-month high.

The pan-European FTSEurofirst 300 was up 1 percent and Japan's Nikkei average closed up 0.75 percent at a more than seven month high.

Emerging shares <.MSCIEF> hit a fresh 2009 high, up over 1 percent to their highest level since October.

Stock markets have been rising since March, although there have been some signs recently of an easing off in gains.

Hopes for a second-half recovery in the global economy, however, have been fanning demand for riskier assets and those tied to growth.

The Reuters-Jefferies CRB index, a global commodities benchmark, is up 12.3 percent for the month, on its way to the biggest monthly gain since July 1974.

Gains in commodities reflect continued recovery of demand outlook from its collapse after Lehman's bankruptcy triggered concerns of a depression, said Dariusz Kowalczyk, chief investment strategist with SJS Markets in Hong Kong.

Medium-term outlook remains positive for commodities and other risky asset classes as we continue to expect that U.S. GDP will start to expand in Q3 and several major Asian economies already in Q2, he said in a note.

Spot gold was up 1 percent at $967 an ounce for a more than 9 percent monthly gain, which also could reflect some caution among investors.

DOLLAR DOWN

Some of the rise in commodity prices, however, is linked to the fall in the dollar, which slipped toward a five-month low against a basket of currencies.

Signs that the global recession may have passed its worst has reignited concern about ballooning U.S. government debt and prompted investors to sell the safe-haven currency.

The euro rose half a percent to above $1.40 and the dollar sank a third of a percent to 96.6 Japanese yen.

Higher-yielding currencies were big gainers as befits a mood of risk appetite. The New Zealand dollars gained nearly 1 percent against its U.S. counterpart.

Yields on euro zone government bonds fell despite the stock gains.

Euro zone supply is out of the way ... maybe there's a bit of a chance of an end of week recovery, said a trader in London. There's a fair bit of data so there's a danger that U.S. data comes out on the strong side again and knocks things down.

(Additional reporting by Tamawa Desai, editing by Toby Chopra)

Japan Nikkei 225 Investment