* Stocks also gain as euro zone bank worries fade
* Dollar trades flat ahead of Fed Chief testimony
* Oil near three-month lows as supply fears ease (Adds opening of U.S. markets, byline, dateline; previous LONDON)
By Herbert Lash
NEW YORK, July 14 (Reuters) - Global equity markets rose on Monday, lifted by Citigroup's earnings and as investors put aside concerns about euro zone banks, while the dollar was little changed ahead of congressional testimony from the chair of the U.S. Federal Reserve.
Citigroup Inc reported a stronger-than expected adjusted quarterly profit as its fixed-income business performed ahead of forecasts, and the bank reached a $7 billion settlement over its sale of flawed mortgage securities.
The settlement with the U.S. Justice Department was more than twice what many analysts had expected, but less than the $12 billion sought by the government.
Citigroup shares rose 3.5 percent to $48.65 as the second biggest boost to the benchmark S&P 500 index, after Apple Inc.
Europe's biggest markets gained more than half a percent , helped by deal-making activity in the pharmaceutical sector and easing anxiety about the fallout from problems at Portugal's biggest listed bank.
"There's a bit of a snap-back from the Portugal hiccup," said Philip Orlando, chief equity market strategist at Federated Investors in New York. "And investors are starting to rethink what kind of earnings season we're going to have," he said.
MSCI's all-country world equity index rose 0.67 percent, while the FTSEurofirst 300 index of top European shares rose 0.94 percent to 1,364.80.
The Dow Jones industrial average rose 135.07 points, or 0.8 percent, to 17,078.88. The S&P 500 gained 11.52 points, or 0.59 percent, to 1,979.09 and the Nasdaq Composite added 30.108 points, or 0.68 percent, to 4,445.598.
The dollar drifted around the unchanged mark against most major currencies on Monday but edged higher against the Japanese yen as investors awaited congressional testimony on Tuesday by Fed Chair Janet Yellen on U.S. monetary policy.
The dollar was up 0.2 percent against the yen at 101.56 , but the euro rose 0.14 percent to $1.3627. The dollar index was 0.04 percent lower at 80.156.
U.S. Treasuries prices slipped on expectations that Yellen could take a less accommodative stance on interest rates in her congressional testimony on Tuesday.
Benchmark 10-year U.S. Treasury notes were last down 6/32 in price to yield 2.5413 percent.
Brent crude oil steadied around $107 a barrel on Monday, close to its lowest in three-months after weeks of heavy falls on signs of improving supply from key producers and weak demand in some consuming centers.
Brent crude was up 17 cents at $106.83. U.S. crude futures fell 25 cents to $100.58 a barrel. (Reporting by Herbert Lash, Additional reporting by Patrick; Graham in London; Editing by Meredith Mazzilli)