GLOBAL MARKETS-Stocks set to post best week of year, dollar up

* World stocks firm, on track for best week so far in 2011

* Greenback rallies as QE2 extension seen unlikely

* Gold slips on dollar strength

* Oil dips on Mideast, Libya developments (Recasts, updates prices; adds analyst quotes)

By Rodrigo Campos

NEW YORK, March 25 (Reuters) - Global stocks rose on Friday and were on track to post their best week since December, while the dollar rose after Federal Reserve officials said the current bond-buying program is unlikely to be extended.

U.S. stocks advanced after strong earnings and an optimistic outlook by software maker Oracle fueled hopes that a global resurgence in technology spending remained intact. However, volume remained weak.

"When you see big names like these beat expectations like this, it's very encouraging," said Michael Vogelzang, president and chief investment officer at Boston Advisors, which owns Oracle stock.

"Oracle is taking share, which is great to see, but you don't post these numbers in a soft environment. The market is getting stronger."

U.S. equities are leading global stocks and setting up to close their best week in at least 16, albeit on thin volume.

The MSCI All-Country index <.MIWD00000PUS> gained 0.1 percent and was on track to post its best week since at least early December.

Volume has dwindled in U.S. and other equity markets as violence in the Middle East and northern Africa, coupled with Japan's natural disasters two weeks ago and its nuclear power crisis, obscure the outlook for the global economic recovery.

The Dow Jones industrial average <.DJI> added 63.61 points, or 0.52 percent, to 12,234.17. The Standard & Poor's 500 <.SPX> rose 6.58 points, or 0.50 percent, to 1,316.24. The Nasdaq Composite <.IXIC> gained 15.99 points, or 0.58 percent, to 2,752.41.

The dollar rallied after several top Federal Reserve officials said the U.S. central bank is unlikely to extend its bond-buying stimulus program beyond a planned $600 billion.

Philadelphia Fed Bank President Charles Plosser also said the Federal Reserve will have to reverse its easy money policy in the "not-too-distant future" to avoid sowing the seeds of inflation, changing the outlook for benchmark interest rates.

The euro and yen hit session lows versus the greenback after Plosser's comments, adding to strength in the U.S. currency after government data showed the world's largest economy grew more quickly than previously thought in last year's fourth quarter.

The dollar index <.DXY>, a gauge of the greenback against a basket of major currencies, jumped 0.7 percent.

The euro was last down 0.7 percent at $1.4070.

The yen traded at 81.37 from a session low of 81.49 per dollar .

European leaders reached agreement on new anti-crisis measures at a summit but were forced to delay increasing their rescue fund and acknowledged they faced new threats from a government collapse in Portugal.

Portugal's president consulted political leaders on whether to call a snap election after the Socialist prime minister resigned following parliament's rejection of his reforms.

The crisis could force Lisbon to request a bailout from the European Union and International Monetary Fund. [ID:nLDE72N0NZ].

Portuguese bond yields hit new highs after Standard & Poor's downgraded the country's debt ratings and warned it could cut them again.

Spain's Prime Minister Jose Luis Rodriguez Zapatero said he did not fear contagion from a potentially prolonged period of political instability in Portugal. [ID:nLDE72O1EF]

Spain is considered by the markets as another likely candidate seek a bailout.

European shares closed slightly higher on stronger signs on the economy and corporate results.
Graphic on world stock polls: http://r.reuters.com/juw68r European sovereign debt crisis: http://r.reuters.com/hyb65p

OIL, PREY TO MIDEAST

U.S. crude and Brent were on track for healthy weekly gains, though prices were slightly lower on Friday.

Spot gold lost nearly 2 percent as the dollar spiked following a brief rally to an all-time high $1,447.40 on Thursday.

Japan's Nikkei index <.N225> rose 1.1 percent to post its best week since November as foreign investors scooped up battered shares. In the previous two weeks, the Nikkei had lost nearly 14 percent. (Additional reporting by Ann Saphir, Steven C. Johnson, Ryan Vlastelica, Wanfeng Zhou, Axel Bugge and Shrikesh Laxmidas; Editing by Kenneth Barry)