GLOBAL MARKETS-Stocks rise on earnings; oil up on Iran ships

* World stocks gain on earnings optimism

* Israel warning to Iran stokes oil, Swiss franc rally

* Sterling falls after BoE inflation report

(Adds details, updates prices)

By Wanfeng Zhou

NEW YORK, Feb 16 (Reuters) - World stocks reached 30-month highs on Wednesday on strong corporate earnings, while oil and the Swiss franc rallied after Israel said a move by Iranian warships to traverse the Suez Canal was a "provocation".

The comments by Israel's foreign minister, together with reports of protests in Iran, Yemen and Bahrain, raised concern Middle East tensions could disrupt oil supplies. See [ID:nN16REASUR] and [ID:nLDE71F0T5]

The MSCI world equity index <.MIWD00000PUS> rose 0.6 percent to 344.97, after hitting its strongest since August 2008.

Brent crude jumped to 29-month highs and was last up $2.16 at $103.81 . U.S. crude for March delivery rose 85 cents to $85.18 a barrel, extending gains after data showed crude oil and gasoline stockpiles rose less than expected last week.

"Troubles in the Middle East are back on the agenda, protests in Bahrain and Saudi have drummed up political tension," said Rob Montefusco, an oil trader at Sucden Financial.

Wall Street rose after estimate-beating results from technology bellwether Dell Inc. and a flurry of deal news.

The Dow Jones industrial average <.DJI> was last up 44.58 points, or 0.36 percent, at 12,271.14. The Standard & Poor's 500 Index <.SPX> rose 5.77 points, or 0.43 percent, to 1,333.78. The Nasdaq Composite Index <.IXIC> gained 14.85 points, or 0.52 percent, to 2,819.06.

European shares <.FTEU3> posted a 29-month closing high for the third straight day, supported by strong earnings from French bank Societe Generale and brewer Heineken .

The gains followed an earlier jump in Japan's Nikkei average <.N225> to a nine-month high. Emerging stocks <.MSCIEF> were up 0.4 percent.

"There is a growing confidence in the outlook for the global economy. The recovery looks like it is being transformed into a sustainable expansion and that does mean that the outlook for earnings is very positive," said Mike Lenhoff, chief strategist at Brewin Dolphin.

SAFE-HAVEN FRANC

The U.S. dollar fell to a session low of 0.9575 Swiss francs on tensions between Israel and Iran. It pulled back to trade at 0.9639, down 0.4 percent. The franc is often seen as a safe-haven in times of geopolitical turmoil.

The dollar also fell versus the euro on the news from Israel and traders said the dollar was being sold on the view that this could be a security threat for Israel.

"Should there be a conflict with Israel, this would be bad for the U.S. as well," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey.

Sterling fell after the Bank of England downgraded its economic outlook in its quarterly inflation report, even as consumer prices spiked higher. That stoked fears of stagflation and dampened expectations UK interest rates would rise sooner rather than later.

"The key guidance being that any tightening ahead is likely to prove modest with potentially only 0.50 point of tightening in 2011," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFL.

Inflationary pressures may also be building up in the United States, a potentially troubling development for the Federal Reserve. Data on Wednesday showed U.S. core producer prices in January rose to their highest rate in more than two years. See [ID:nN16ST1] (To see an analysis on market inflation expectations click on, [ID:nN15149987]) (Additional reporting by Jessica Mortimer and Jessica Donati in London; Editing by Andrew Hay)