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* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* World shares extend two-month highs as miners, banks makeground
* Iron ore at near 2-year high after Brazil orders damclosures
* Dollar waits for Trump State of Union Address
* Aussie dollar gains as central bank stays firm withmessage
* Euro slips on lacklustre economic data
By Marc Jones
LONDON, Feb 5 (Reuters) - Europe's miners and banks helpedworld stocks extend their white hot start to the year onTuesday, while the dollar was straining for a fourth day ofgains as traders waited for U.S. President Donald Trump's Stateof the Union address.
The Federal Reserve's cautious turn last month wascontinuing to drive up appetite for riskier assets but therewere also a number of idiosyncratic factors feeding outsizedmoves.
News that oil giant BP had doubled it profits andanother tickup in crude prices overnight pushed the oil and gassector up 1.5 percent.
Miners were also up sharply as traders digested news thatBrazil had ordered Vale, the world's largest iron ore miner, toclose eight of its dams following a deadly collapse that killedover 300 people last month.
Iron ore prices surged 14 percent at the end of last week inanticipation of the move and are now at a near 2-year high.
"Our fundamental view is there no reason for this incrediblemove, so is it just speculation, a frenzy about possiblestimulus in China?," said Saxo Bank's head of FX Strategy JohnHardy. "What should we do with it? I don't know, but it shouldbe noted."
China and large parts of Asia were closed for Lunar New Yearcelebrations overnight but the bits that were open made someheadway too.
Japan's Nikkei average marked its highest level inseven weeks at one point before fading to finish slightly lower.
Australian shares suffered no such fatigue. Theyjumped 2 percent, with long-battered financials surgingon short-covering after a special government-appointedmisconduct inquiry left the structure of the country's powerfulbanks in place.
On Wall Street, the S&P 500 gained on Monday, withtechnology and industrials the biggestwinners, 100-day moving averages sliced through and the VIX"fear gauge," dropping to its lowest in four months.
With Europe continuing to rally, MSCI's gauge of stocksacross the globe reached a two-month high. Ithas just had its best January on record, rising more than 13percent from a near two-year low hit in late December.
Having changed tack on rate rises last week the Fed took theunusual step of issuing a statement on Monday saying that itshead Jerome Powell had told President Donald Trump and TreasurySecretary Steven Mnuchin that "the path of policy will dependentirely on incoming economic information."
In the currency markets, the dollar held on to recent gainsagainst its major peers as investors continued to lap-upFriday's strong payrolls number and a manufacturing survey.
The dollar index against six major currencies was afraction higher at 95.916, having gained 0.27 percent theprevious day.
The euro weakened slightly to $1.1420, as datashowing Euro zone business growth almost stalled in Januaryknocked it further away from a three-week high of $1.15405 setlast week.
AUSSIE BUCKS HIGHER
The Australian dollar gained 0.5 percent to $0.7260, erasing earlier losses, after the Reserve Bank ofAustralia left policy unchanged at its first meeting this yearbut sounded less dovish than the markets had wagered on.
The Aussie had earlier fallen fell as much as 0.5 percentafter a slump in retail sales reinforced concerns about thehealth of the economy.
Traders' focus was already shifting to U.S. President DonaldTrump's delayed State of the Union address, due at 2100 ETTuesday/0200 GMT Wednesday, as well as U.S. ISMnon-manufacturing figures, also due later in the day.
Trump told a White House event over the weekend that hemight declare a national "emergency" because Democrats inCongress weren't moving toward a deal to provide money to builda wall on the border with Mexico. Such a step wouldlikely prompt a court challenge from Democrats.
"If President Trump persists in his long-promised wall alongthe U.S.-Mexico border in the upcoming address, it would cap thedollar's rally," said Kengo Suzuki, chief FX strategist atMizuho Securities.(Reporting by Marc Jones; Editing by Kirsten Donovan)
