GLOBAL MARKETS-Stocks up 3 quarters in row; commods jump

 * Oil, grains jump, seen feeding inflation down the road
 * Crude up 24 pct for quarter -- best performing asset
 * Euro rises as ECB sticks to rate hike plan
  (Recasts with surge in commodities; updates quotes and
prices)
 By Barani Krishnan
 NEW YORK, March 31 (Reuters) - Stocks on major world
markets headed for their third straight quarter of gains on
Thursday and commodities surged, feeding inflationary pressure
that could boost equities further.
 Global stocks, as measured by the MSCI All-Country World
Index (.MIWD00000PUS: Quote, Profile, Research), hit three-week highs and were poised to
close the first quarter up 4.0 percent. The index rose 0.2
percent and was up a total of 22 percent in the two previous
quarters.
 On Wall Street, the Dow Jones industrial average was flat
but still 7 percent higher for the quarter after gaining 18
percent in the previous six months.
 In commodities, prices of wheat (Wc1: Quote, Profile, Research), corn (Cc1: Quote, Profile, Research) and
soybeans (Sc1: Quote, Profile, Research) -- raw materials for bread, syrup and animal
feed -- rose by as much as 5 percent.
 U.S. crude oil (CLc1: Quote, Profile, Research) jumped 2 percent to 2-1/2 year highs.
Brent crude oil was poised to finish the quarter up 24 percent
as the best performing major asset.
 Oil prices rose as Middle East protests and Libya's
conflict kept threats to supply in focus. Grains shot up as
strong demand ate into stockpiles.
 Analysts said they expected price pressures from
commodities to channel into other markets, pushing up shares of
natural resource producers.
 "To see another couple of percent moves in stocks going
into the end of the second quarter will not surprise us at
all," said Oliver Pursche, president of Gary Goldberg Financial
Services, which manages over $500 million, in Suffern, New
York.
 "We think commodity-related stocks such as Mosaic (MOS.N: Quote, Profile, Research),
Cliss Natural Resources and Deere (DE.N: Quote, Profile, Research) will particularly do
well, although we could see more market volatility as the QE 2
nears its June expiry," Pursche said, referring to the Federal
Reserve's $600 billion stimulus effort, which proved to be the
lifeblood of capital markets.
 Despite strong quarterly gains, Wall Street has recorded
some of the year's lightest trading over the last week as
investors played safe by riding on winning stocks.
 Prices on Thursday were little changed, with investors
reluctant to make big bets before Friday's monthly employment
report. For more see [.N]
 By 2:00 p.m. (1800 GMT), the Dow (.DJI: Quote, Profile, Research) was up 2.04 points,
or 0.02 percent, at 12,352.65. The Standard & Poor's 500 Index
(.SPX: Quote, Profile, Research) was up 0.36 point, or 0.03 percent, at 1,328.62. For the
quarter, it was up 5.6 percent as of Wednesday's close.
 The Nasdaq Composite Index (.IXIC: Quote, Profile, Research) was up 1.23 points, or
0.04 percent, at 2,778.02 and has risen 4.7 percent in the
quarter.
 "I think at this point, the market deserves the bullish
benefit of the doubt," said Adam Sarhan at New York-based
financial advisory Sarhan Capital.
 "You have a nuclear threat in Japan, instability in
oil-producing countries, debt panic in Ireland and other
periphery countries in Europe, and yet the market doesn't come
down."
 ECB MULLS RATE HIKE
 The euro rose on expectations the European Central Bank
will raise interest rates in April despite the euro zone debt
crisis, which intensified on Thursday.
[ID:nLDE72U17E][ID:nWLA6919] [USD/]
 Portugal's budget deficit reached 8.6 percent of gross
domestic product in 2010, above a target of 7.3 percent agreed
with the EU.
 The yield premium investors demand to hold Portuguese bonds
rather than benchmark German bonds rose to 508 basis points, 12
bps wider on the day, as the country's 10-year yields
(PT10YT=TWEB: Quote, Profile, Research) hit 8.476 percent.
 Despite the financial mess faced by some nations, the ECB
has signalled it could raise rates next week to curb inflation,
a message that has kept the euro strong against other
currencies.
 The yen fell to a 10-month low of 117.90 versus the euro
and hit a three-week trough of 83.21 against the U.S. dollar as
expectations grew that Japan would lag the euro zone and U.S.
central banks in raising rates. So far this year, the euro has
risen nearly 8.0 percent against the yen. [USD/]
 In the bond market, U.S. Treasuries prices rose after U.S.
data showed weekly jobless claims fell a bit less than
expected. There was some flight-to-safety bid as Portuguese
government bond yields rose. [US/]
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
  Asset returns in Q1 2011 graphic
  http://r.reuters.com/wur78r
  Key events in Q1 2011 timeline
  http://r.reuters.com/saj68r
  ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
  (Additional reporting by Ellen Freilich and Caroline
Valetkevitch in New York; and Dominic Lau in London; Editing by
Kenneth Barry)


GLOBAL MARKETS-Stocks up 3 quarters in row; commods jump