GLOBAL MARKETS-Stocks gain further,dollar rise after Citi result

(Updates prices after Citigroup's results)

By Ian Chua

LONDON, April 18 (Reuters) - European stocks extended gains on Friday while the dollar strengthened after Citigroup posted a first-quarter loss that was not as heavy as some had predicted, setting the scene for a positive start on Wall Street.

Citigroup's (C.N) shares rose 6 percent in pre-U.S. market trade after the largest U.S. bank posted a first-quarter loss of $5.11 billion, hurt by write-downs and increased revenues for credit losses.

"Generally, it is regarded as better than expected. The writedown was $6 billion which wasn't too bad ... for the markets it's quite a good news," said Mark Foulds, head of equity sales at TradIndex in London.

The $6 billion in writedowns contrasted sharply with market rumours for writedowns approaching $22 billion.

European stocks, already buoyed by talk that the Royal Bank of Scotland (RBS.L) would announce a rights issue next week, added to early gains.

"Banks are taking action to shore up their capital position and that means they must have a better idea of precisely what exposure they have," Justin Urquhart Stewart, an investment director at Seven Investment Management.

"They can only come to the market once, you can't keep coming back and doing it."

The FTSEurofirst 300 .FTEU3 index of top European shares rose 1.5 percent with Britain's FTSE .FTSE gaining 0.9 percent and Germany's DAX .GDAXI adding 1.4 percent.

Bank stocks such as Societe Generale (SOGN.PA) and BNP Paribas (BNPP.PA) both rose more than 3 percent, while RBS shares gained 1.4 percent.

U.S. stock index futures SPc1DJc1NDc1 were all up between 0.5 and 1 percent, suggesting a stronger start for the U.S. market.

Better-than-expected earnings from Internet leader Google Inc (GOOG.O) after the U.S. closing bell on Thursday also helped lift sentiment.

Earlier, Japan's Nikkei .N225 rose 0.6 percent but MSCI's measure of other Asian stock markets .MIAPJ0000PUS slid 0.6 percent. MSCI world equity index .MIWD00000PUS edged up 0.3 percent.

Gains in stocks weighed on demand for safe-haven government bonds, pushing yields higher. The 10-year Bund yield EU10YT=RR climbed 2.7 basis points to 4.110 percent, while the yield for the benchmark 10-year U.S. Treasuries US10YT=RR put on 4.7 basis points to 3.807 percent.