LONDON (Reuters) - The debate over a possible end to the dollar's seven-year downtrend will take centre stage this week as the supercycle in oil and commodities runs out of stamina, helping stocks and bonds in times of slowing economic growth.

The dollar staged its biggest gain in seven-and-a-half years on Friday against the euro and hit a five-month high versus major peers as evidence grew that US economic troubles are spreading to the rest of the world. This view is likely to be confirmed by this week's growth data from Japan and the euro zone.

Concerns about slowing growth and energy demand pushed oil prices down more than $30 from their July record peak above $147 a barrel, while broader commodity prices extend a decline after staging their biggest monthly fall in 10 years in July.

"With dollar strength the commodity bubble is bursting," said Serge Laureau, strategist at Saxo Bank in Copenhagen.

The US currency rose as high as $1.4996 per euro on Friday for the first time since February.

A rising dollar and falling oil prices create a virtuous circle and help risky assets as they ease inflation pressures, giving central banks rooms to fight the one-year-old credit crisis with interest rate cuts.

Reflecting such optimism, world stocks, measured by MSCI, stayed last week well above the 21-month low hit in July even though financial firms and other corporates unveiled more damage from the credit crisis.