GLOBAL MARKETS-Stocks, euro jump as focus sharpens on Slovakia

News

* World stocks at 3-week highs, euro at near 1-month peak

* Commodities up too while Treasuries continue downdraft

(Recasts and updates with U.S. markets open; changes byline, changes dateline, previous LONDON)

By Barani Krishnan

NEW YORK, Oct 12 (Reuters) - Stocks on major world exchanges hit 3-week highs on Wednesday while the euro rose to its highest in almost a month as investors bet Slovakia would reach a deal to expand the euro zone's rescue fund.

Commodity prices like those of crude oil in London also rose broadly, for a third straight day. But U.S. Treasuries continued Tuesday's downdraft as fewer investors took to safe-haven bonds amid the growing appetite for risk. [US/]

Stocks on Wall Street were higher, extending the rally across Europe.

"It's like no bad news, we get to go up as long as you don't see any horror stories," said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago. "At the moment it appears as if Europe has at least contained the crisis."

Slovakia is the last country in the 17-member euro zone that still needs to approve a plan to strengthen the currency zone's rescue fund. Parties in the outgoing Slovak government began talks with the opposition to reach a deal on ratifying the plan. For details, see [ID:nL5E7LC0JT] and[ID:nTOPEURO]

German Chancellor Angela Merkel weighed in, saying she expected full ratification by the European Union summit on Oct. 23. [ID:nB4E7KT01M]

Investors are also looking to the European Union to announce a bank recapitalisation plan, which is due later on Wednesday and is designed to cushion the impact any default by Greece could have on the region's banks.

"Markets are clearly still hoping for a comprehensive plan to tackle the (euro zone) debt crisis. This may continue to support the market over the next couple of months," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.

The euro jumped against the dollar following the break of an options barrier at $1.3700, which took it through a series of stop-loss entry orders above that. The single currency gained more than 1 percent on the day to $1.3816 on the EBS trading platform, its strongest since Sept. 16.

At 10:22 a.m. EDT (1422 GMT), the Dow Jones industrial average <.DJI> was up 114.51 points, or 1.00 percent, at 11,530.81. The Standard & Poor's 500 Index <.SPX> was up 15.49 points, or 1.30 percent, at 1,211.03. The Nasdaq Composite Index <.IXIC> was up 33.33 points, or 1.29 percent, at 2,616.36.

Financials were among the best performers on Wall Street, with the KBW Bank index <.BKX> up 2.8 percent. JPMorgan Chase & Co gained 3 percent to $33.28.

Alcoa Inc fell 4.7 percent to $9.81 to become one of the biggest drags on the Dow. The largest U.S. aluminum producer's third-quarter profit was lower than the second quarter and fell short of already reduced expectations due to a slump in global metals prices. [ID:nN1E79A1OO]

The MSCI world equity index <.MIWD00000PUS> erased initial losses to gain 1.2 percent. The benchmark index is now more than 11 percent above a 15-month low hit earlier in October.

European stocks <.FTEU3> rose 1.4 percent to a five-week high.