NEW YORK, July 24 - World stocks edged higher on Friday to 2009 highs and crude oil rebounded as investors shrugged off weak results from Microsoft to bid up drugmakers and energy shares on growing signs of economic recovery.

The dollar fell against the euro as figures showing a stabilizing euro zone economy and a good week for the U.S. stock market eroded demand for the greenback as a safe haven.

The rise in risk appetite on hopes that a global recession is bottoming out led oil prices to rebound and top US$68 a barrel. Analysts and traders hope a turnaround in the global economy will lift battered fuel demand.

Solid corporate earnings and a slew of recent data boosted optimism about the economy and gave new life to a months-long rally in U.S. stocks that lifted the Dow <.DJI> above the 9,000 mark this week for the first time since early January.

"Overall, this was a very good week for sentiment," said Ronald Simpson, managing director of global currency analysis at Action Economics in Tampa, Florida.

The Dow and broader S&P 500 initially fell after Thursday's late news showing weak results from Microsoft Corp and American Express. That gave investors pause about global stocks that had risen more than 6 percent this week.

The Nasdaq snapped a 12-day string of gains, its longest run since 1992, to end 0.4 percent lower.

The MSCI world equity index <.MIWD00000PUS> is up about 14 percent this year, and despite declines in a leading index of European stocks and a slide in the Nasdaq, closed slightly above break-even on Friday.

Copper hit a nine-month high before settling 20 cents a pound lower and aluminum rose to eight-month highs in signs of strong investor confidence in an economic recovery.

"The strength of the rally is derived mainly from the idea that as we enter the end of this year and early next year, further economic gains will kick demand back in," said Gene McGillian, an analyst for Tradition Energy in Stamford, Connecticut.

The Dow Jones industrial average rose 23.95 points, or 0.26 percent, to 9,093.24. The Standard & Poor's 500 Index advanced 2.97 points, or 0.30 percent, to 979.26. But the Nasdaq Composite Index shed 7.64 points, or 0.39 percent, to 1,965.96.

U.S. crude settled up 89 cents at US$68.05 a barrel, the highest settlement since July 1. The gains extended a rally that has pushed prices up more than 14 percent since July 14.

London Brent crude rose US$1.07 to settle at US$70.32 a barrel, after topping US$70 a barrel for the first time since July 1 earlier.

Gold futures for August delivery settled down US$1.70 at US$953.10 but held above US$950 an ounce.

"The dollar's weakness and the idea that inflation expectations are on the rise are holding gold here," said Andrey Kryuchenkov, an analyst at VTB Capital.

U.S. Treasury prices were little changed as a choppy stock market revived some safety bids for bonds and offset worries over next week's record US$115 billion supply of longer-dated debt.

The benchmark 10-year note was unchanged in price to yield 3.67 percent, while two-year notes were flat to yield 1.01 percent and the 30-year long bond was up 1/32 in price to yield 4.55 percent.

In late trading in New York, the euro rose 0.4 percent to US$1.4211.

The euro got a lift after the Ifo German business sentiment index rose for a fourth month running to its highest since October, while initial estimates showed the euro zone services and manufacturing sectors contracted much less sharply than expected in July.

The dollar fell 0.3 percent against the yen to 94.70. The ICE Futures' dollar index, which tracks the greenback versus a basket of six other major currencies, was little changed at 78.760.

In Europe, the FTSEurofirst 300 index of top regional shares ended 0.1 percent lower at 907.39.

But the FTSE 100 index in London ended up 0.4 percent at 4,576.61, its highest close since Jan. 7. The index has risen almost 11 percent in the past two weeks.

Asian stocks hit a 10-month peak, with the MSCI benchmark for Asia outside Japan up 0.6 percent. Japan's Nikkei average rose 1.6 percent and closed higher for an eighth straight day of gains.

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