* U.S. durable goods orders and housing prices rise
* China's central bank soothes credit worries
* Government debt prices slip on economic data
* Oil tops $101 on easing liquidity fears, Canada floods
By Herbert Lash
NEW YORK, June 25 (Reuters) - Global equity markets rose and the dollar recovered from early losses on Tuesday after U.S. economic data ranging from manufacturing to housing to consumer confidence delivered a dose of optimism to investors who have been preoccupied with worries over Federal Reserve policy.
Orders for durable goods rose more than expected in May and a gauge of planned business spending gained for a third straight month, while prices of single-family homes posted their biggest rise in seven years in April.
Also on Tuesday, the Conference Board, a private business research group, reported that its U.S. consumer confidence index rose in June to 81.4, well above economists' expectations, from a downwardly revised 74.3 in the prior month.
At first blush, the data seemed bullish for markets as it showed the economy is improving. But such improvement suggests the Fed could proceed to ease its bond-buying program, an expectation that pushed up bond yields and drove down stocks in recent days.
"The market trend has turned to the downside. It is now easier to sell rallies than to buy dips, so strategies have flipped," said Donald Selkin, chief market strategist at National Securities in New York, which has about $3 billion in assets under management.
European shares bounced off seven-month lows while MSCI's all-country world equity index rose from prices last seen at the beginning of the year. The world index rose 0.8 percent.
The FTSEurofirst 300 of leading European shares rose 1.5 percent to close at 1,130.37, a day after closing at its lowest level since late November.
The Dow Jones industrial average was up 115.53 points, or 0.79 percent, at 14,775.09. The Standard & Poor's 500 Index was up 15.34 points, or 0.98 percent, at 1,588.43. The Nasdaq Composite Index was up 25.37 points, or 0.76 percent, at 3,346.12.
The pause in the market's recent rout began when two Fed policymakers on Monday downplayed the notion of an imminent end to the central bank's money-printing and said the market reaction was not yet a cause for concern.
Asian markets then capped a day of wild swings, during which Chinese stocks plunged to their lowest level since the global financial crisis began, followed by a late rally on hopes authorities in China would step in to prevent a crisis.
China's central bank fueled the talk at a news briefing where it sought to allay fears of a credit squeeze by committing to guide interest rates to "reasonable" levels after they had been allowed to spike over the past week.
The dollar extended gains against the yen and euro on Tuesday after data showed sales of new U.S. single-family homes rose to their highest in nearly five years in May, confirming the housing market's strengthening tone.
The dollar rose against the yen, to 97.76 yen from about 97.61 yen before the data, up 0.04 percent on the day.
The euro fell to the session low of $1.3066 where it traded before the data. It was trading at 1.3083, down 0.26 percent.
"The dollar has been trading on Fed speculation for the last two weeks," currency strategist John Doyle at Tempus Inc in Washington said. "Yesterday, comments from two Fed officials were more dovish than Bernanke but attention has now shifted to durable goods, which were good for the 'tapering sooner' argument."
Prices of U.S. Treasuries edged down slightly in choppy trade, while German Bund futures pared early gains on the U.S. manufacturing data.
The benchmark 10-year U.S. Treasury note was down 9/32 in price to yield 2.5763 percent.
Bund futures settled at 140.54, up 23 ticks from Monday's close. Bunds rose as high as 141.01 before the data.
Oil was above $101 a barrel, rebounding from a three-week low, as investor concern eased about a liquidity crunch in China and as Canadian pipeline closures threatened exports to the United States.
Brent crude rose 36 cents to $101.52 a barrel. U.S. oil rose 24 cents to $95.42.
"Stock markets are up and commodity prices are up across the board," said Carsten Fritsch, analyst at Commerzbank in Frankfurt, citing the Chinese officials' comments as prompting a change in market sentiment.