(Bloomberg) ? Investors worldwide should favour stocks over bonds this year on optimism that economic and profit growth will stay robust, according to HSBC Holdings Plc.

Rising interest rates and commodity prices are still merely symptoms of economic strength, and aren?t yet restraining growth or causing inflation to accelerate, said Richard Cookson, a London-based strategist, in a report yesterday.

?Many are muttering that rising bond yields, Middle Eastern worries, and soaring commodity prices are about to put an end to this investment nirvana,? wrote Cookson, 42. ?We don?t think it will.?

The strategist reiterated an ?overweight? recommendation on equities, particularly in emerging markets. The stance suggests that holdings of stocks should exceed their weight in benchmarks. HSBC, Europe?s biggest bank by market value, is ?underweight? bonds.

The Morgan Stanley Capital International World Index, a global equity benchmark, has jumped 69 percent since the end of 2002, reaching its highest in more than five years on April 6. Stocks including Volkswagen AG and JDS Uniphase Corp. have gained in the past year even as oil and metals including copper climbed to records.

Crude oil for May delivery today set an all-time high of $70.88 a barrel in electronic trading on the New York Mercantile Exchange amid concern tension over Iran?s nuclear research will lead to a reduction in exports from the world?s number four producer.

Most of the rise in commodity price has resulted from strong demand, not supply restrictions, Cookson said.

?We should be more worried if commodity prices fell because this might indicate that growth was slowing,? the strategist wrote. HSBC forecasts that global economic expansion will accelerate to 4.4 percent this year from 4.3 percent in 2005.