Global shares rise after strong earnings; euro hits 7-month low

By Lewis Krauskopf

NEW YORK (Reuters) - Shares in major markets rallied on Tuesday, fueled by strong corporate reports in the United States and Europe, while the U.S. dollar and Treasury yields rose as firming inflation backed expectations of an impending interest rate hike.

Better-than-expected results from retailers Home Depot and Wal-Mart Stores pushed the S&P 500 index higher, shoring up some confidence in the sector after weak economic data and earnings last week sparked concerns about slowing retail spending.

"People understand that the U.S. consumer is okay, but not great," said Steve Blitz, chief economist at ITG. "What we're seeing with the consumer is that there's a limited wallet. If you see increased spending one place, you see decreased spending in another place."

The Dow Jones industrial average rose 86.06 points, or 0.49 percent, to 17,569.07, the S&P 500 gained 9.85 points, or 0.48 percent, to 2,063.04 and the Nasdaq Composite added 30.61 points, or 0.61 percent, to 5,015.22.

In Europe, the FTSEurofirst 300 index increased 2.3 percent, as Germany's United Internet and Dutch-based Randstad, the world's second-biggest staffing company, posted encouraging results.

MSCI's all-country world index rose 1 percent.

"Investors are showing resilience to the recent attacks in Paris despite mounting worries over security in Europe," said B Capital Wealth Management Managing Director Lorne Baring, in London.

Greek stocks surged and bond yields hit their lowest in more than a year after the country's finance minister said Athens had reached an agreement with its lenders on financial reforms.

Data on Tuesday showed U.S. consumer prices increased in October after two straight months of declines, a sign of firming inflation that supported expectations the Federal Reserve will raise interest rates next month.

Benchmark 10-year Treasuries were down 9/32 in price with a yield of 2.3045 percent, up 3 basis points from late on Monday.

The dollar index, which measures the dollar against a basket of six major currencies, rose 0.19 percent. The euro lost 0.4 percent against the dollar.

"I think the market has the mindset that there is almost nothing at this stage of the game that is going to dissuade the Fed from going in December," said Lane Newman, director of foreign exchange at ING Capital Markets in New York.

Oil prices slumped as the global oversupply in crude and petroleum products returned to focus. Brent dropped 1.5 percent to $43.91 a barrel, while U.S. crude fell 1.7 percent at $41.02 a barrel.

"Unless the geopolitical tensions, which have obviously risen since Friday, are going to be manifested in physical supply destruction in the Middle East, I think sentiment should remain more bearish than bullish," PVM Oil Associates analyst Tamas Varga said.

Gold fell 0.7 percent, heading back near six-year lows.

Copper prices touched their lowest point in more than six years as fears about demand growth in China and a higher dollar fuelled negative sentiment.

(Reporting by Lewis Krauskopf, Additional reporting by Dion Rabouin in New York, Abhiram Nandakumar in Bengaluru, Jemima Kelly, Amanda Cooper, Atul Prakash, Marius Zaharia and Patrick Graham in London, and Shinichi Saoshiro in Tokyo; Editing by Gareth Jones and Nick Zieminski)