GLOBAL MARKETS-Oil rises on Kuwait strike; global stock index highest since Dec

* MSCI (NYSE: MSCI - news) global stocks index hits highest since December

* U.S (Other OTC: UBGXF - news) . stocks near flat after midday in New York

* Commodity currencies up vs U.S. dollar (Updates with European shares close)

By Caroline Valetkevitch

NEW YORK, April 19 (Reuters) - Oil prices rose on Tuesday following a workers' strike in Kuwait, while a global stock index hit its highest since December as signs of economic stabilization in China lifted demand for riskier assets.

The rise in oil prices drove up the currencies of countries dependant on commodity exports, including the Australian dollar which rose to a 10-month high. Copper prices also jumped.

MSCI's All Countries World Index, which tracks shares in 45 countries, was up 0.9 percent by midday in New York and hit its highest level since December, while European stocks closed up 1.5 percent. Stocks in Japan and China also ended higher.

"The predominant theme is risk on," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.

"We came into the year concerned about Chinese growth and an aggressive (Federal Reserve), and we've gotten nothing even remotely similar to where our fears were."

However, the S&P 500 stock index gave back early gains to trade nearly unchanged around midday in New York, weighed down by technology shares including Netflix (Xetra: 552484 - news) , which dropped 10.7 percent a day after the company reported results.

The Dow Jones industrial average was down 1.06 points, or 0.01 percent, to 18,003.1, the S&P 500 had lost 0.88 points, or 0.04 percent, to 2,093.46 and the Nasdaq Composite had dropped 38.73 points, or 0.78 percent, to 4,921.29.

The rise in crude oil prices from below $30 a barrel seen in February, and signs of steady economic growth in China recently, along with the U.S. Federal Reserve's cautious approach to raising interest rates, are all factors supporting stock prices in recent weeks.

Brent crude oil was last at $43.73 per barrel, up 82 cents, while U.S. crude oil was up $1.07 at $40.85.

The workers' strike in Kuwait cut production to 1.1 million barrels per day from 2.8 million in March and overshadowed the weekend failure by oil producers meeting in Doha to agree to freeze output. However, an official of the Kuwaiti state refiner said output would be restored in coming days.

The U.S. dollar hit 10-month lows against some commodity-related currencies and touched a nearly one-week low against the euro after weak U.S. housing data reinforced views of a dovish Fed.

U.S. housing starts fell more than expected in March and permits for future home construction hit a one-year low.

The Australian dollar hit $0.7817, its highest level against the U.S. dollar since last June, while the New (KOSDAQ: 160550.KQ - news) Zealand dollar touched $0.7055, also its highest since last June on the back of gains in oil prices. The Canadian dollar also rallied.

Brazil's currency, the real, gained 1.8 percent against the dollar. The real had weakened on Monday after the central bank intervened to prevent it rising sharply following a Congressional vote to impeach President Dilma Rousseff, a move which may result in a more market-friendly government.

Gold (Other OTC: GDCWF - news) rose as the dollar weakened, with gold touched a one-week high of $1,256.80 an ounce. Copper was up 2.4 percent. (Additional reporting by Sam Forgione in New York; Nigel Stephenson in London; Lisa Twaronite in Tokyo, Anirban Nag, John Geddie and Atul Prakash in London; Editing by Larry King and Clive McKeef)