GLOBAL MARKETS-Stocks rally to record highs; gold gains

* MSCI world index; S&P 500, Nasdaq surge to new highs

* Gold gains as hedge against shifting markets in 2020

* Oil rises on trade hopes, OPEC's supply curbs

By Herbert Lash

NEW YORK, Dec 26 (Reuters) - Gold prices rose and a gauge of

global equity markets hit a record high on Thursday in light

holiday trade as a year-end rally in stocks remained on course,

with optimism over U.S.-China trade helping drive Wall Street to

records.

Oil rose to three-month highs, buoyed by a report showing

lower U.S. crude inventories, hopes the pending Sino-U.S. trade

deal will soon be signed and efforts by the Organization of the

Petroleum Exporting Countries to curb crude supply.

Boxing Day holidays closed markets in Commonwealth countries

around the world while a second Christmas Day shuttered markets

in a swath of European countries.

Overnight in Asia, equity markets rose, with China shares

closing higher after Beijing laid out further plans to bolster

its economy, including some $385 billion in planned

infrastructure investments.

MSCI's gauge of stocks across the globe .MIWD00000PUS

gained 0.28% to a record high. Its broadest index of

Asia-Pacific shares outside Japan .MIAPJ0000PUS closed up

0.15%, while Japan's Nikkei .N225 rose 0.60%.

Stocks on Wall Street rallied, with the benchmark S&P 500

and Nasdaq composite setting record intraday peaks. The S&P 500

is about 1 percentage point short of its best year since 1997.

Investors in major equity markets around the world have

chalked up strong gains this year, marking a contrast to a

plunge late last year, said Yousef Abbasi, global market

strategist at INTL FCStone Financial Inc in New York.

"People are pretty happy with this year," he said.

Fourth-quarter earnings will soon come into focus in

January, which should highlight whether sentiment among

corporate management has improved, Abbasi said.

Recession fears scuttled capital expenditure plans during

much of 2019 but strong employment and signs of an improving

global economy suggests that will change next year.

The number of Americans filing applications for unemployment

benefits fell last week in a sign of ongoing labor market

strength. Earlier, a spokesman for China's commerce ministry said

Chinese and U.S. officials are in close touch and going through

necessary procedures before signing a Phase 1 trade deal.

In late-morning trading the Dow Jones Industrial Average

.DJI rose 72.9 points, or 0.26%, to 28,588.35. The S&P 500

.SPX gained 11.17 points, or 0.35%, to 3,234.55 and the Nasdaq

Composite .IXIC added 43.28 points, or 0.48%, to 8,996.16.

Spot gold XAU= rose 0.8% to $1,509.88 an ounce.

Gold has been on the rise recently as a hedge against

potential inflation, dollar weakness and increased equity market

volatility in 2020, Abbasi said.

U.S. Treasury yields edged lower before the Treasury

Department was to sell $43 billion in seven-year notes, with

volume light during a holiday-shortened week.

Benchmark 10-year notes US10YT=RR fell 3/32 in price to

yield 1.919%.

The auction comes after the U.S. government drew strong

demand for a $41 billion sale of five-year notes on Tuesday and

slightly soft interest in a $40 billion two-year note sale on

Monday.

The dollar edged lower, while oil gained.

The dollar index .DXY fell 0.09%, with the euro EUR= up

0.09% to $1.11. The Japanese yen JPY= weakened 0.30% versus

the greenback at 109.68 per dollar.

The American Petroleum Institute, an oil industry group,

said late on Tuesday that U.S. crude stocks fell by 7.9 million

barrels last week, much more than the decline forecast by

analysts. API/S

Brent crude LCOc1 , the global benchmark, reached $67.83 a

barrel, the highest since Sept. 17, and was trading up 39 cents

at $67.59 a barrel. U.S. West Texas Intermediate CLc1 crude

gained 14 cents to $61.25 a barrel.