* Crude's fall to 5-yr low seen as "tax cut" for consumer
* Oil falls tends to fuel global equity market gains
* Worries include knock-on effects on energy sector
By Lionel Laurent and Blaise Robinson
LONDON, Dec 1 (Reuters) - Despite hundreds of billions ofdollars wiped off energy company shares since June by the slidein oil prices to a five-year low, there are reasons to becheerful about the likely future impact on global stock markets.
Cheaper oil is, after all, good for global growth. It putsmore money in the pockets of consumers, companies and countriesthat buy commodities from abroad. If current prices hold through2015, global GDP growth could rise by around 0.3 percentagepoints, or around $250 billion, according to Morgan Stanley.
There are of course plenty of reminders around that theworld economy is not in great shape: a decline in manufacturinggrowth across Asia and Europe in November was the latestevidence that the recovery may be grinding to a halt as centralbanks fight to stamp out fears of a deflationary spiral.
But investors are betting that the current oil price fall ison the "good" side of deflation, easing the bill for consumersand companies without putting off investment plans.
"This fall in oil is like a tax cut for the consumer," saidEmmanuel Cau, an equity strategist at J.P.Morgan Chase, addingthat the drop in crude to below $70 a barrel was more theproduct of a supply glut than a drop in global demand.
While inflation will likely be dragged down from already lowlevels, Cau said this was unlikely to spook consumers intodelaying spending; central banks may err on the side of cautionand avoid tightening monetary policy too soon, he added.
"We expect global activity, consumer activity and retailsales to be more positive over the next few months," he said.
HISTORY LESSONS
The market reaction for now looks grim indeed: $248 billionin market value has been wiped off European energy companies'shares since June.
But history suggests that a sharp fall in oil prices tendsto indicate a buying opportunity for stocks. Since 1985, globalequities have gained on six of the 10 times that oil prices havefallen more than 30 percent, according to Citigroup research.
So while oil exporters like Russia and energy stocksworldwide are bearing the brunt of this year's sell-off,investors and analysts expect this to be more than offset byoverall gains for transport, retail, consumer goods and otherindustries on U.S., Japanese and eurozone stock markets.
"On a longer-term horizon this is going to put extra moneyinto the consumer's pocket...It should probably be supportivefor equities as a whole," said Wouter Sturkenboom, seniorinvestment strategist at Russell Investments, which has $275billion in assets under management.
What might spoil the party is if 2014's oil-price drop turnsout to be much more than an adjustment to oversupply.
The 2008 financial crisis and 2001 recession were twoexceptions to the historical pattern where stock markets fell intandem with oil prices as demand -- not just supply -- imploded.
ENERGY COMPANIES SUFFER
While some investors believe the economic recovery is stillon track, especially in the U.S., others point to potentiallypainful knock-on effects from the energy sector, even if it onlyaccounts for about 10 percent of the market capitalisation oftop U.S. and Europe equity indexes.
After all, the quadrupling of oil prices between 2002 and2012 led to a drilling boom; reeling that in may haveconsequences on economic growth and on credit markets, whereU.S. shale-oil companies have been "aggressive borrowers" inrecent years, according to Citi.
"The U.S. will benefit at a consumption level but faceconsiderable headwinds on credit and a dire need for thebubble-like investments in shale to unwind," said SteenJakobsen, Chief Investment Officer at Saxo Bank in Denmark.
As well as cutting investment, major oil companies arelikely to have to increase borrowing to maintain their cherisheddividend payouts.
For now though, investors remain broadly positive on theimpact of oil's fall on global equities, especially if thecorresponding drop in inflation helps central banks stick to thescript of stepping up measures to spur growth.
"The drop in oil price was the best thing that could havehappened," said Luca Paolini, chief strategist at Pictet. "Itincreases consumers' spending power and gives the (U.S.) Fed anexcuse not to raise rates." (Additional reporting by Francesco Canepa and Sudip Kar-Guptain London; editing by Keith Weir)