GLOBAL MARKETS-Stocks rise as strike in Kuwait lifts oil prices

* MSCI (NYSE: MSCI - news) global stocks index hits highest since Dec. 7

* European shares at three-month high after Asian gains

* Oil rises, lifting investor appetite for risky assets

* Higher oil lifts commodity currencies vs U.S (Other OTC: UBGXF - news) . dollar

By Nigel Stephenson

LONDON, April 19 (Reuters) - Global stocks reached their highest levels since early December on Tuesday as oil prices rose, driven by a strike in Kuwait, and signs of economic stabilisation in China improved demand for risky assets.

MSCI's All Countries World Index, which tracks shares in 45 countries, rose as high as 407.45 points, its highest since Dec. 7, on strong gains in Europe and Asia.

Wall Street looked set to join the party, with index futures

suggesting stocks would open 0.3 to 0.5 percent higher.

The rise in oil prices, largely driven by a strike that nearly halved output from Kuwait, drove the Australian dollar to a 10-month high and boosted other commodity-linked currencies against the U.S. dollar.

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

Brent crude, the international benchmark, last traded at $43.76 per barrel, up 85 cents.

"It (Other OTC: ITGL - news) is quite amazing how oil prices have recovered from Monday's lows. That is shoring up risk appetite and pushing up commodity-linked currencies," said Niels Christensen, an FX strategist at Nordea. "As long as oil remains above $43 a barrel, we think commodity currencies will remain supported."

Oil's rise from the lows around $27 touched in February, along with signs of strength in the U.S. and Chinese economies and the U.S. Federal Reserve's cautious approach to raising interest rates, have helped lift stocks in recent weeks.

The pan-European FTSEurofirst 300 share index rose 1.3 percent, led to a three-month high by gains in basic resources stocks. The FTSEurofirst is up 14 percent from February lows.

The possibility that China is stabilising is reassuring markets, said Lorne Baring, managing director at B Capital Wealth Management in Geneva, cited positive signals from China. .

Britain's resources-heavy FTSE 100 added just 0.3 percent, held back by a 0.6 percent rise in sterling against the dollar.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 1.1 percent, after touching its highest intraday levels since early November.

Tokyo's Nikkei gained 3.7 percent, Australian shares climbed to their highest since early 2016 and New (KOSDAQ: 160550.KQ - news) Zealand shares reached a new record high.

In China, both the CSI 300 and the Shanghai Composite indexes closed 0.3 percent higher.

Emerging market stocks measured by MSCI rose 0.8 percent and EM currencies broadly gained. Oil exporter Russia's rouble gained 1 percent to 65.50 per dollar and the South African rand rose 1.2 percent to 14.3 per dollar, a 4 1/2-month high.

Brazil's currency, the real, gained 1 percent against the dollar. It had weakened on Monday after the central bank intervened to prevent it rising sharply following a vote to send President Dilma Rousseff to trial in the Senate.

The Australian dollar rose 0.5 percent to $0.7787, having earlier hit its strongest since June at $0.7802. The Canadian dollar hit its highest since July.

The U.S. dollar edged 0.2 percent lower against a basket of currencies. The euro was up 0.2 percent to $1.1333 but the safe-haven yen, which last week strengthened to 17-month highs around 107.61 per dollar, fell 0.6 percent to 109.36.

CAUTIOUS

Assurances from Chair Janet Yellen that the Fed would be cautious in raising rates have held the dollar in check lately. No move is expected when the Fed meets next week, but investors will be watching for suggestions of an increase in June.

European Central Bank policymakers meet on Thursday.

Government bond yields rose with stocks. In the euro zone, Italian yields rose before an auction and Spanish 10-year yields rose 2.8 basis points to 1.53 percent after political parties again failed to form a government, following an inconclusive election in December.

Copper prices, which have benefited from signs of economic recovery in China in recent weeks, dipped 0.4 percent to $4,809 a tonne.

Gold (Other OTC: GDCWF - news) rose as the dollar weakened. It last traded at around $1,243 an ounce. (Additional reporting by Lisa Twaronite in Tokyo, Anirban Nag, John Geddie and Atul Prakash in London; Editing by Larry King)