GLOBAL MARKETS-Shares hit new 11-month high four days in row

* World shares hit new 11-month high for 4th straight row

* Dollar set for steepest weekly fall in four months

* Commodity prices buoyed by economic outlook

(Fixes spelling in headline)

By Sebastian Tong

LONDON, Sept 11 (Reuters) - A weakening dollar and robust Chinese economic data sharpened investor appetite for risk on Friday, sending world stocks to fresh 11-month highs for the fourth session in a row.

Investors shrugged off an unexpected downward revision of Japan's second quarter GDP growth, taking their cue instead from data showing a surprise acceleration in Chinese industrial output, retail and production. [ID:nT287585] [ID:nPEK13979]

The figures also allayed fears Beijing would rein in its fiscal and monetary policy aggressively -- a concern that has stalked markets in recent weeks.

The MSCI main world equity index <.MIWD00000PUS> advanced for the seventh successive session, edging 0.4 percent higher to its highest level since last October and on track for a 4 percent gain this week.

G20 finance ministers set the tone for the week's gains after pledging to keep policy accommodative in order not to endanger a nascent global economic recovery.

"Policy makers appear to be succeeding with their efforts to stabilise the financial system and reflate the global economy and business sentiment is continuing to improve," said Mike Lenhoff, chief strategist at Brewin Dolphin.

"I think that for equity markets to move significantly beyond current levels and to hold on to their gains means they need to be discounting a sustainable recovery and I'm not sure that they are on to this just yet."

Emerging stocks <.MSCIEF> firmed 0.6 percent to new 12-month high while the pan-European blue-chip FTSEurofirst 300 index <.FTEU3> edged 0.6 percent higher.

Almost a year after the collapse of U.S. financial giant Lehman Brothers convulsed global markets, financial stocks were among the strongest gainers, helping to push Britain's key FTSE 100 index <.FTSE> beyond its 5,000 mark by midday.

WEAK DOLLAR

Increased appetite for higher yielding currencies and riskier assets saw the dollar sink to a one-year low against a basket of currencies <.DXY>.

Feeding into bearish dollar sentiment were comments by a U.S. Treasury official that it made sense for China to diversify its huge stockpile of reserves. [ID:nPEK61981]

Weighed down by persistent concern over its long term value, the dollar is set for its steepest weekly decline in almost four months while the euro, which hit a 2009 high of $1.4627 is on track for its biggest weekly gain. The sliding dollar also helped support commodity price gains with gold rising back above $1,000 after early day softness and oil holding above $71 a barrel.

The improving global economic outlook, flagged by the 30-nation Organisation for Economic Cooperation and Development, also boosted demand for commodities. [ID:nLB622449]

Emerging sovereign debt spreads <11EMJ>, an indicator of risk appetite, tightened 3 basis points to trade at 358 bps over U.S. Treasuries.

Euro zone government bonds remained well bid as some investors sought refuge in less risky sovereign debt amid some concern over the sustainability of the stock market rally.

The December Bund future was up 32 ticks at 121.22 versus 120.90 at Thursday's settlement close. (Additional reporting by Atul Prakash; editing by Chris Pizzey)