GLOBAL MARKETS-World stocks up as Dubai fears fade

* World stocks up as risk aversion eases

* U.S. dollar, Treasuries unwind gains as fears soothed

* U.S. stocks gain as Dubai fears contained (Updates with closing prices)

By Manuela Badawy

NEW YORK, Nov 30 (Reuters) - World stocks rose on Monday as shock waves from Dubai's debt delay proposal died down after the Arab emirate's largest company said it planned to restructure some of its units.

The U.S. dollar fell against the euro after the United Arab Emirates promised liquidity, easing worries about a default.

Dubai's proposed delay last week in repaying billions of dollars of debts of state-owned conglomerate Dubai World and property subsidiary Nakheel roiled global markets. It raised fears the emirate could default after funding a spectacular building boom on a mountain of debt. [ID:nSP362937]

For a graph on the Emirates' debt please click on: http://graphics.thomsonreuters.com/119/ME_DBTSK1109.gif

Hopes possible fallout for U.S. banks from Dubai's debt woes will be contained pushed the MSCI world stock index <.MIWD00000PUS> 0.47 percent higher on the day, gaining 28.6 percent so far this year.

Late in the New York session, Dubai World said it was planning a restructuring of some of its units including developer Nakheel, in a move covering $26 billion in debt.

The UAE central bank's decision on Sunday to provide emergency liquidity to its banks also helped ease some concerns and prompted a bounce back in emerging markets across Asia.

Emerging shares <.MSCIEF> were up 1.29 percent while the MSCI index of Asia Pacific stocks traded outside Japan <.MIAPJ0000PUS> rose 2.64 percent.

"The Dubai issue will have only a transitory effect on global markets and does not represent significant systemic risk to emerging markets or the broader global financial system unless it is revealed that a large global bank or hedge fund has significant exposure to Dubai," RBC Capital Market said in a note to clients.

The safe-haven U.S. dollar fell against a basket of currencies <.DXY> by 0.26 percent as investors' fears of a deterioration in the tepid global economic recovery calmed.

"Even though the dollar is down, risk has been definitely taken off the table," said John McCarthy, director of foreign exchange at ING Capital Markets in New York.

The euro rose 0.28 percent at $1.5007 pulling back from last week's 15-month peak just above $1.5140. Against the Japanese yen, the dollar was down 0.14 percent at 86.29 after a Japanese official said the government would try to stem the currency's rise, although did not specify any measures. [ID:nT77759]

U.S. Treasuries rose slightly as the unwinding of a safe-haven bid related to a possible Dubai debt default was countered by month-end demand for U.S. government debt.

Benchmark 10-year Treasury notes traded 1/32 lower in price, its yield rising to 3.20 percent from 3.21 percent late Friday.

Two-year Treasury notes traded 1/32 higher in price, yielding 0.67 percent after dipping to 0.62 percent on Friday, the lowest since last December.

SHOPPING IN FOCUS

U.S. stocks rose helping the Dow post its fifth straight monthly gain, on hopes possible fallout from Dubai's debt woes will be contained.

But retail shares limited the advance as investors worried the holiday shopping season might have gotten off to a tepid start as consumers trimmed purchases over the Thanksgiving Day holiday amid concerns about an uncertain economy.

The Dow Jones industrial average <.DJI> rose 0.34 percent, at 10,344.84. The Standard & Poor's 500 Index <.SPX> gained 0.38 percent, at 1,095.63, while the Nasdaq Composite Index <.IXIC> firmed 0.29 percent, at 2,144.60.

Consumer spending, the backbone of the U.S. economy accounting for two-thirds of activity, was significantly less per person at the start of the holiday season even than last year, when Lehman Brothers' cataclysmic collapse paralyzed the global financial system.

Meanwhile, European shares fell to their lowest close in more than three weeks, with oil companies among the biggest fallers, as worries about Dubai's debt continued to unsettle European equity markets.

The FTSEurofirst 300 <.FTEU3> index of top European shares ended 1.3 percent lower at 986.70 points, the lowest close since Nov 4. The index rose 1 percent in November and is up nearly 53 percent from a lifetime low hit on March 9.

Dubai's government said on Monday it was not responsible for the debts of its flagship conglomerate, offering little clarity on a plan to delay billions in debt repayments that has rattled world markets. [ID:nSP362937]

Dubai's benchmark index closed 7.3 percent lower on Monday. UK banks have the biggest loan exposure to the UAE. Please see: http://graphics.thomsonreuters.com/119/DB_EXP1109.gif (Additional reporting by Gertrude Chavez-Dreyfuss in New York) ((manuela.badawy@thomsonreuters.com; +1 646-223-6055; Reuters Messaging: manuela.badawy.reuters.com@reuters.net)) ((Multimedia versions of Reuters Top News are now available

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