* World stocks headed for biggest gain in 16 months
* Oil, gold surge too, leading broad commodities rebound (Corrects 1st paragraph and 6th paragraph to show major world markets headed for largest gains since May 2010, not May 2011)
By Barani Krishnan
NEW YORK, Sept 27 (Reuters) - Stocks on major world markets were headed for their largest daily gain in 16 months on Tuesday, and oil and gold prices rallied too, as improving sentiment over the European debt crisis helped markets rebound from last week's selloff.
The U.S. dollar fell against the euro for a third straight day. U.S. Treasuries prices also slipped, with 30-year bonds down by over two full points, as demand for safe-havens ebbed. [USD/] [US/]
"The market is beginning to get the feeling that finally European lawmakers are moving out of their paralysis," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
"Commodity prices are up across the board. There's hopes a global recession can be avoided."
Stocks rose for a third straight day. By 9:43 a.m. EDT (1343 GMT), Wall Street's Dow Jones industrial average <.DJI> was up 207.64 points, or 1.88 percent, at 11,251.50. The Standard & Poor's 500 Index <.SPX> was up 20.91 points, or 1.80 percent, at 1,183.86. The Nasdaq Composite Index <.IXIC> was up 36.55 points, or 1.45 percent, at 2,553.24.
The MSCI all-country world stock index <.MIWD00000PUS> was up 3.2 percent, on track to its largest daily gain since May 2010. For the week thus far, the index is up 4.3 percent, after dropping more than 7.0 percent last week.
The broad-based rebound follows expectations built over the weekend from meetings of the International Monetary Fund in Washington D.C. which signaled European policymakers were acting to contain Greece's debt problems and resolve a crisis threatening to engulf the world economy.
Some officials have said plans were underway to boost the size of a regional bailout fund to cut Greece's debts and recapitalize banks, although others have underlined they these were at a very early stage. Germany has also said there are no plans to increase the size of the fund. [ID:nLDE78P01H]
"Given so much uncertainty at the moment, there is room for both pessimism and optimism. The optimists have taken the forefront on hopes that we could see European politicians getting to grips with the current situation over the coming weeks," said Keith Bowman, analyst at Hargreaves Lansdown.
"But there are still a lot of concerns. Investors remain sceptical."
U.S. crude oil