* MSCI world equity index up 1.4 percent at 250.08
* Improving PMIs around the world boost risky assets
* Oil hits 7-mth peak above $68/bbl; dollar hits 5-mth lows
By Natsuko Waki
LONDON, June 1 (Reuters) - World stocks and oil rallied to fresh 2009 highs on Monday while the dollar hit 5-month lows after evidence of improvement in global factory activity reinforced expectations that the world economy is recovering.
Such optimism triggered broad-based flows into riskier investment - including stocks, oil, commodities and emerging market 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, Britain and the euro zone.
"The most important theme is that real money investors are busy getting back to at least neutral positioning in risky assets, that is providing a boost," said Beat Siegenthaler, chief emerging markets strategist, TD Securities. MSCI world equity index rose 1.4 percent to its highest since October. 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 2.7 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. stock futures were up around 1.5 percent, pointing to a firmer open on Wall Street.
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 0.5 percent to 94.88 per dollar while sterling hit a seven-month high of $1.6432.
The weaker U.S. currency supported energy and commodities, which are priced in dollars. U.S. crude oil rose more than 2 percent to $68.29 a barrel, its highest since early November.
Gold hit a three-month high of $988.50 an ounce, its highest since late February.
Copper rose more than 2 percent to above $5,000 a tonne, its highest level since mid-October.
"The market continues to buy the recovery story as economic data suggests that the worst is behind us," said David Thurtell, analyst at Citigroup. "Investment money continues to pour into the complex."
The June bund future rose 13 ticks on the day. (Additional reporting by Carolyn Cohn; editing by Stephen Nisbet)