* New York's Empire State data stronger than expected
* World Bank raises its global growth outlook for 2013
* Dollar extends gains versus yen, euro; oil rises
* U.S. government debt prices fall as inflation seen rising
By Herbert Lash
NEW YORK, Jan 15 (Reuters) - Global equity markets pushed higher and the dollar advanced on Wednesday after the latest economic data and stronger-than-expected earnings from Bank of America pointed to continued improvement in the U.S. economy.
U.S. producer prices posted their largest gain in six months in December as the cost of gasoline rebounded strongly, but inflation pressures remained benign.
In addition, a manufacturing gauge for New York State jumped to its highest level in 20 months in January as new orders soared, the Federal Reserve Bank of New York said.
The U.S. Labor Department said its seasonally adjusted producer price index rose 0.4 percent last month, the biggest rise since June, after slipping 0.1 percent in November.
The New York Fed's Empire State general business conditions index rose to 12.51 in January, the highest reading since May 2012, up from a revised 2.22 the prior month. Economists polled by Reuters had expected a reading of 3.75.
"We're going from bad news is good news to good news is good news; no one wants to see the economy doing badly any more," said Yu-Dee Chang, chief trader of ACE Investments in Vienna, Virginia.
"Going forward, it's back to earnings and we're keeping an eye on the banks," Chang said.
Bank of America Corp, the second largest U.S. bank, said quarterly profit surged nearly $3 billion as revenue increased and mortgage losses plunged in the clearest sign yet the bank was shaking off the impact of the financial crisis.
Bank of America shares rose 2.4 percent to $17.18, the highest level since May 2010.
The benchmark S&P 500 index touched another record high on Wednesday.
MSCI's all-country world index rose 0.49 percent, while shares in Europe hit 5-1/2-year highs, buoyed by a better global growth outlook from the World Bank.
The World Bank late on Tuesday raised its forecast for global growth for the first time in three years, upping its forecast for 2014 by two-tenths of a point to 3.2 percent, as advanced economies started to pick up pace, led by the United States. The bank also predicted a faster growth pace for both 2015 and 2016.
Separately, data confirmed that private consumption in Germany, Europe's biggest economy, rose 0.9 percent in 2013, indicating underlying strength even though headline gross domestic product grew just 0.4 percent for the year.
The pan-European FTSEurofirst 300 index of leading regional shares rose almost 1.0 percent to close at a provisional 1,339.06 points.
On Wall Street, the Dow Jones industrial average rose 120.02 points, or 0.73 percent, to 16,493.88. The S&P 500 gained 9.24 points, or 0.5 percent, to 1,848.12 and the Nasdaq Composite added 26.99 points, or 0.65 percent,0 to 4,210.006.
The dollar advanced, with the dollar index up 0.4 percent to 80.987. Against the yen, the dollar rose 0.22 percent to 104.43 yen after gaining more than 1 percent on Tuesday.
The euro fell 0.57 percent to $1.3601.
"The data that we've since the payrolls report Friday has been quite positive," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.
U.S. Treasuries yields rose on expectations inflation may start picking up and potentially bring forward when the Federal Reserve starts raising interest rates.
Benchmark 10-year Treasury notes were last down 7/32 in price to yield 2.8949 percent.
German Bund futures fell 14 ticks to settle at 140.54.
Brent oil futures rose to $107 a barrel after a larger-than-expected draw on U.S. crude oil and distillate stocks offset bearish signals from a possible rise in Iranian oil exports.
Crude oil stocks dropped by 7.7 million barrels on the week, capping the largest 7-week drop on record, compared to a forecast of a 0.6 million barrel fall, according to the U.S. Energy Information Administration.
February Brent crude rose 79 cents to $107.18 a barrel. U.S. crude for February delivery rose $1.70 to $94.29 a barrel.