GLOBAL MARKETS-Oil, stocks gain on weak dollar, optimism

* Wall Street gains on economic optimism, weak dollar

* Dollar mostly lower ahead of U.S. bank earnings

* Oil jumps 2 percent on optimism, colder U.S. weather

* Trading is light due to holiday; U.S. bond market closed (Updates with close of U.S. markets)

By Herbert Lash

NEW YORK, Oct 12 (Reuters) - Oil and other commodity prices rose on Monday on renewed optimism over the pace of economic recovery and a weak U.S. dollar, which helped lift the benchmark S&P 500 Index to its highest close in a year.

Oil jumped more than 2 percent to touch a six-week high, aluminum rose to a near one-month high and copper gained, supported by a looming strike in Chile. For details, see: [ID:nSP416736] [ID:nLC677696]

Gold briefly rose within striking distance of an all-time high above $1,060 an ounce as the weak dollar increased the metal's appeal as a hedge against inflation and falling currencies. [ID:nLC97376]

The dollar was mostly lower as investors shunned it for higher-yielding currencies and assets on the belief quarterly earnings, including from some top U.S. banks, will exceed expectations. [ID:nN12147006]

JPMorgan Chase & Co and Goldman Sachs Group Inc are slated to release results this week. [RESF/US] Results that top forecasts will drive risk appetites higher.

The MSCI all-country world index <.MIWD00000PUS> hit a new one-year high, gaining 0.5 percent on rising stock markets in Europe and the United States. Asia-Pacific shares outside of Japan fell slightly, with Tokyo markets closed for a holiday.

With the U.S. government shut for the Columbus Day holiday, trading was light. The U.S. bond market was closed, as were most major markets in Latin America, except Mexico and Peru.

The S&P 500 gained for a sixth straight session, its best winning streak since a six-day romp ending in June 2007.

Optimism over the third-quarter earnings season, which begins in earnest on Tuesday, has fueled the recent rally. The S&P 500 is up almost 60 percent from March's 12-year closing low. But stocks pared gains as investors decided to lock in profits before the onslaught of corporate results.

"It's a quiet start to the week given the holiday and the market is positioning for some of the financial earnings," said Joe Manimbo, a currency trader at Travelex Global Business Payments in Washington.

The Dow Jones industrial average <.DJI> closed up 20.86 points, or 0.21 percent, at 9,885.80. The Standard & Poor's 500 Index <.SPX> added 4.70 points, or 0.44 percent, at 1,076.19. The Nasdaq Composite Index <.IXIC> slipped 0.14 points, or 0.01 percent, at 2,139.14.

European shares gained on better-than-expected earnings from Dutch giant Philips Electronics , which reinforced investors' confidence in third-quarter results. [ID:nLC210070]

The world's biggest lighting maker and Europe's biggest consumer electronics producer benefited from cost-cutting and a drop in revenue that was less than feared. [ID:nLC210070]

"The results of companies like Philips are important, and other corporates are also reporting decent profits," said Franz Wenzel, a strategist at AXA Investment Managers in Paris.

"The other main reasons for the stock market rally are still in place. The macroeconomics are improving. And, importantly, we still have ample liquidity."

The FTSEurofirst 300 <.FTEU3> of top European shares rose 0.7 percent to 1,005.37 points, while The FTSE 100 index <.FTSE> in London set a fresh one-year high.

Euro zone government bonds rebounded in a rally spurred by their British counterparts on comments by ratings agency Moody's and a report that interest rates in Britain may stay at a record low until 2011. [ID:nLC438051]

Bunds underperformed gilts, with the 10-year bond yield spread narrowing to its tightest in four months, after Prime Minister Gordon Brown gave his backing to the Bank of England's program of pumping money into the economy.

The dollar was down against a basket of major currencies, with the U.S. Dollar Index <.DXY> down 0.35 percent at 76.167.

The euro was up 0.34 percent at $1.4777, and against the yen, the dollar was up 0.09 percent at 89.85.

The pound wallowed against both the euro and dollar on the report forecasting rock-bottom interest rates for some time.

Energy prices rose after colder temperatures were forecast for later in the week for much of the United States, including the key U.S. Northeast heating oil region. [ID:nDTN641]

U.S. crude rose $1.50 to settle at $73.27 a barrel, the highest settlement since Aug. 24. Brent crude traded up $1.36 to settle at $71.36 a barrel.

December gold futures settled up $8.90 at $1,057.50 an ounce in New York.

The MSCI index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> dipped 0.2 percent. Markets were closed in Japan for a holiday. (Reporting by Leah Schnurr, Steven C. Johnson, Matthew Robinson in New York; Emelia Sithole and Brian Gorman in London; writing by Herbert Lash; Editing by Andrew Hay)