GLOBAL MARKETS-Global stocks rally but economic doubts persist

(Recasts with U.S. markets, adds byline; dateline previous LONDON)

By Herbert Lash

NEW YORK, March 12 (Reuters) - Global stocks rose for a second day on Wednesday on central bank efforts to ease tight credit markets but the dollar fell broadly to a new low against the euro on a trans-Atlantic split over interest rates.

But debt prices rose amid investor doubts whether an effort by the Federal Reserve, the European Central Bank and other central banks does enough to alleviate concerns about the health of a global financial system that has stalled and threatens bring on a U.S. recession.

Oil steadied near a record high and gold gained nearly 1 percent as the struggling dollar and firm oil prices prompted investors and speculators to build fresh trading positions.

Strong euro zone data on industrial output renewed the focus on the divergent paths of European and U.S. interest rates, strengthening the case for the ECB to resist pressure for an early interest rate cut.

The greenback and global stocks had rallied sharply on Tuesday after the Federal Reserve said it would lend primary dealers $200 billion in Treasury securities and accept a wider array of mortgage debt as collateral to help ease tight credit markets.

Investors, still worried about the outlook, took profits amid nagging doubts about a U.S. economy many believe already is in recession. The key equity averages retreated from initial highs.

"I think the air is being let out of the balloon of yesterday's run-up. I would not be completely convinced that this test is finished yet," said Bruce Zaro, chief technical strategist at Delta Global Advisors in Boston.

"We're still seeing people selling into any rally."

The Dow Jones industrial average .DJI was up 74.74 points, or 0.61 percent, at 12,231.55. The Standard & Poor's 500 Index .SPX was up 3.63 points, or 0.29 percent, at 1,324.28. The Nasdaq Composite Index .IXIC was up 13.94 points, or 0.62 percent, at 2,269.70.

The financial sector led gains in U.S. and European equity markets, while industrial shares in New York climbed as economic bellwether Caterpillar (CAT.N) raised its revenue forecast for 2010.

Caterpillar, the world's largest maker of construction and mining equipment, cited continued spending on worldwide infrastructure. Shares rose 4.66 percent to $76.

European shares rose in a broad rally, with more than three stocks advancing for every decliner, while British insurer Standard Life (SL.L) soared on strong results.

Swiss banks UBS (UBSN.VX) and Credit Suisse (CSGN.VX), which have been hit by the credit crisis, both rose by more than 6 percent after the central bank moves.

The FTSEurofirst 300 index .FTEU3 of top European shares unofficially closed up 1.1 percent at 1,283.09 points, after earlier rising more than 2 percent to a session high of 1,296.05 points.