GLOBAL MARKETS-Stocks rally, euro up as Portugal seen contained

* MSCI world index reclaims level before Japan disasters

* Nikkei futures point to gains in Tokyo, break key level

* Sterling hits 2011 low vs currency basket

* Gold turns lower after hitting record high (Updates to U.S. market close, changes quotes, adds detail)

By Rodrigo Campos

NEW YORK, March 24 (Reuters) - Global stocks rose for a sixth consecutive session on Thursday, recouping the losses after Japan's natural disasters, while the euro jumped on optimism that European policymakers will be able to control a political and debt crisis in Portugal.

U.S. stocks rose for a second day on optimism about upcoming earnings and as the quarter's top performers drew buyers.

Some investors, however, continued to seek out safety, driving gold to a record high of $1,447.40 an ounce, before turning lower as investors took profits. Worries mounted about the ongoing violence in the Middle East and fears that Portugal will, in fact, need a bailout.

Oil prices wobbled as U.N.-mandated air strikes hit Libya for a fifth night, but failed to stop Muammar Gaddafi's tanks from shelling rebel-held towns. A report a French plane had taken down a Libyan jet raised more worries of a long supply outage.

In Syria, anger mounted as forces fired on protesters, killing at least 37, forcing President Bashar al-Assad to pledge greater freedoms.

Fitch cut Portugal's credit ratings by two notches, saying risks to the country's financing rose after parliament failed to pass fiscal consolidation measures and the prime minister resigned. The euro was strong despite mounting pressure on Lisbon to seek a bailout.

Portugal's political crisis dominated the start of an EU summit on Thursday, further complicating efforts to solve the euro zone's debt problems. [ID:nLDE72N0NZ].

"The Portugal story was pretty much priced in," said Samarjit Shankar, managing director of global FX strategy at BNY Mellon in Boston. "Given the rapid events in Portugal and the fall of the government, there might be something that comes out of the summit today and tomorrow."

STOCKS BET ON ECONOMIC RECOVERY

Equity markets gained on bets on a continued economic recovery that were coupled with the end of an upbeat quarter. Light volume continued, however, underscoring caution.

Phil Orlando, chief equity market strategist at Federated Investors in New York said stock markets still face headline risk.

"But it's entirely possible the market feels comfortable that this 7 percent correction we saw from mid-February into mid-March has priced those concerns in, and now we are starting to look forward to the prospect of continued economic growth and solid first-quarter profits," he said.

The Dow Jones industrial average <.DJI> added 84.54 points, or 0.70 percent, to 12,170.56. The Standard & Poor's 500 Index <.SPX> gained 12.12 points, or 0.93 percent, to 1,309.66. The Nasdaq Composite Index <.IXIC> rose 38.12 points, or 1.41 percent, to 2,736.42.

The MSCI All-Country index <.MIWD00000PUS> climbed 0.9 percent, rising for six successive trading days for a gain of 4.8 percent.

In Europe shares rose to a two-week closing high, with the FTSEurofirst 300 <.FTEU3> gaining 1 percent, led by gains in two major British retailers.

U.S. dollar-denominated Nikkei futures rose more than 1.1 percent to trade above the key 9,500 level, pointing to a rebound in Tokyo after a 0.15 percent dip on the Nikkei <.N225> Thursday.

Surveys showed economic recovery continued in March, shrugging off Japan's disaster, although turmoil in the Middle East is pushing prices higher. [ID:nLDE72N0KH]

The global economic recovery will continue through the rest of the year despite the recent unrest in the Middle East and the disaster in Japan, Barclays Capital said in a note, but signs of higher inflation and an increased probability of policy tightening called for caution. [ID:nL3E7EO2HO].
Reuters polls on world stock markets [ID:nLDE72K1HU] Q+A-What's next for Portugal? [ID:nLDE72N00Q] World economic growth, inflation http://r.reuters.com/bex68r Euro zone PMI, earnings momentum http://r.reuters.com/qew68r European sovereign debt crisis: http://r.reuters.com/hyb65p

The euro was up 0.6 percent against the dollar at $1.4170, after earlier falling to a low of $1.40534 on trading platform EBS.

Sterling fell to its lowest this year against a basket of currencies in the wake of weak UK retail sales data and a warning by Moody's on risks to economic growth.

Trade-weighted sterling <=GBP> fell as low as 79.6, its lowest since Dec. 31. Versus the greenback it traded down 0.8 percent at $1.6107.

The yen was steady against the dollar at 80.95 yen , although market players are still wary Japan may intervene to sell the currency if the dollar breaches 80 yen.

Spot gold dipped 0.6 percent to $1,428 an ounce at 2025 GMT after investors took profits following bullion's rise to a record high. Silver also fell after earlier hitting a 31-year high of $38.13.

U.S. crude zigzagged throughout the session before settling down 15 cents per barrel at $105.60 as investors took profits after a recent rally on supply worries. Brent rose 17 cents to settle at $115.72 a barrel, having traded from $114.50 to $115.92. [O/R] (Reporting and writing by Rodrigo Campos; Additional reporting by Tenzin Pema, Gene Ramos, Chuck Mikolajczak, Julien Toyer,Wanfeng Zhou and Jessica Mortimer; Editing by Leslie Adler)