* MSCI world equity index up 1.4 percent at 250.17
* Improving PMIs around the world boost risky assets
* Oil hits 7-mth peak above $67/bbl; dollar hits 5-mth lows
By Natsuko Waki
LONDON, June 1 (Reuters) - World stocks and oil rose to their highest levels in almost seven months on Monday while the dollar hit 5-month lows after evidence of a recovery in global factory activity fanned optimism about the world economy.
Such optimism triggered broad-based buying of riskier assets and offset long-expected news that General Motors will file for bankruptcy, which would be the third largest in the United States.
Surveys released on Monday showed the manufacturing sector posted modest growth in China and improvement was seen in India, Russia and the euro zone.
"There are bits and pieces of good news from many different areas and the risk-on theme is definitely still in place for the moment," SEB currency strategist Johan Javeus said, adding that risk appetite continues to be the main driver for dollar weakness. MSCI world equity index rose 1.4 percent to hit its highest since November.
The index has risen 12 out of the past 13 weeks, gaining 45 percent since its March low.
The FTSEurofirst 300 index rose almost 2 percent, while emerging stocks gained 2.5 percent, hitting their highest since September. The MSCI emerging equities index rose 16.7 percent last month, its largest monthly rise in 20 years.
U.S. crude oil rose more than 2 percent to $67.77 a barrel, its highest since early November.
China's official purchasing managers' index fell slightly in May to 53.1 from 53.5 in April, its third straight month above the 50-mark, which separates expansion from contraction.
In the euro zone, factory activity contracted at a much less severe pace in May than in preceding months, with the region's PMI index posting its biggest monthly jump in the survey's 12-year history by rising to 40.7 from 36.8 in April.
The dollar fell 0.5 percent to hit a five-month low against a basket of major currencies. The low-yielding yen fell 0.6 percent to 94.76 per dollar.
The weaker U.S. currency supported dollar-priced energy and commodities. Gold hit a three-month high of $985.30 an ounce, its highest since late February.
"Gold is rising because the dollar is weak, the economy is stabilising, and interest rates are low," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.
"There is too much hot money around as governments are printing money, and one option is to put that into stocks and the other is gold."
The June bund future was steady on the day. (Additional reporting by Jessica Mortimer; editing by Stephen Nisbet)