GLOBAL MARKETS-Stocks make strong start to second half; dollar flat

Tue Jul 1, 2014 11:06am EDT

* S&P 500 hit record intraday high, Nasdaq up 1 percent
    * Data show growth in U.S., Chinese manufacturing
    * Euro zone factory, inflation data point to need for ECB
help
    * French banks help European stocks start H2 robustly
    * Dollar barely above 7-week low on forecasts of dovish Fed

 (Updates market action, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, July 1 (Reuters) - Stock markets around the world
rose at the start of the second half of 2014 on Tuesday,
propelled by solid U.S. and Chinese data and the notion that
central banks will keep interest rates low for some time.
    Encouraging U.S. and Chinese factory figures pointed to
stabilization in the world's two biggest economies, while weaker
data on euro zone manufacturing and inflation supported the view
the European Central Bank might lower interest rates to help the
region's businesses and avert deflation. 
  
    "The latest data from China suggests that the main economic
and oil demand growth engine of the world may be starting to
turn the corner toward the upside," said Dominick Chirichella,
founding partner of the Energy Management Institute in New York.
    There was relief among euro zone banks after
France's largest, BNP Paribas, on Monday pleaded
guilty and agreed to pay almost $9 billion for violating U.S.
sanctions against Sudan and other countries. 
    The Dow Jones industrial average rose 116.37 points
or 0.69 percent, to 16,942.97, the S&P 500 gained 10.16
points or 0.52 percent, to 1,970.39 and the Nasdaq Composite
 added 40.801 points or 0.93 percent, to 4,448.979.
    The S&P hit an intraday record high at 1,971.24.
    Top European shares were up 0.6 percent, while
Japan's Nikkei closed up 1.1 percent.  
    The MSCI world equity index, which tracks
shares in 45 nations, rose 2.03 points or 0.47 percent, to
430.78.    
    
    HOME ON THE RANGE
    While Wall Street stocks posted another quarter of gains on
Monday, the dollar and U.S. government bond yields have been
rangebound as the U.S. Federal Reserve has shown no sign it will
raise interest rates anytime soon.
    One big market bet for the first half was for a rise in the
dollar on the view the Fed is inching towards its first
post-crisis rate hike, but this predictions has fallen flat.    
 
    The dollar index fell to a seven-week low of 79.759
on Monday and stood barely above that at 79.791 early Tuesday.
 
    Benchmark U.S. 10-year Treasuries yields, a gauge for the
greenback and global borrowing costs, traded around 2.55 percent
, up 3 basis points on the day. 
    Gold held steady as fighting in Iraq and Ukraine fed
demand for the precious metal, keeping it at a 2-1/2-month high.
  
    Brent crude was last up $0.02, or up 0.02 percent,
at $112.38 a barrel. U.S. crude was last up $0.45, or up
0.43 percent, at $105.82 per barrel.

 (Additional reporting by Marc Jones in London; Hideyuki Sano in
Tokyo; Editing by Louise Ireland, John Stonestreet and Meredith
Mazzilli)