* Euro rises after record Ifo data for July
* Hit earlier by report some Spanish banks fail stress tests
* Robust U.S. quarterly earnings boost stocks
* Results of European bank stress tests due at 1600 GMT
By Dominic Lau
LONDON, July 23 (Reuters) - The euro rose on Friday after a
survey showed German business sentiment posted a record jump in
July to its highest level in three years, and corporate results
lifted stocks ahead of European bank stress tests results.
The single currency was lower before the Ifo survey, as
Spanish newspaper El Pais reported that several of the country's
18 savings banks had failed the tests, which are due for
publication on Friday afternoon. []
The report from Munich-based Ifo think tank helped ease
concerns the global economy could slip back into recession.
"We expected an increase but we didn't expect this. The
German economy is running really strong at the moment," said
Ralph Solveen at Commerzbank.
"The companies are not letting themselves be distracted by
all the negative discussions going on, such as the bank stress
tests, the debt crisis or the threat of a double-dip recession
in the United States."
The euro gained 0.4 percent to $1.2945 <EUR=> and was up 0.4
percent at 112.52 yen <EURJPY=>. The dollar, meanwhile, slipped
0.4 percent against a basket of major currencies <.DXY>.
The tests on 91 European banks, which use scenarios
including declines in the value of sovereign debt they hold, are
due at 1600 GMT.
Meanwhile, Manfred Weber, the head of the Association of
German Banks, told local radio that he was confident that German
banks "all in all" would perform well at the tests.
"The market's assumption is that several of the Spanish
Cajas will fail, along with some peripheral European banks. But
if it goes beyond that the euro reaction will be negative," said
Adam Cole, head of global fx strategy at RBC Capital Markets.
Some analysts also consider Germany's quasi-public regional
landesbanks to be at risk.
According to a survey of investors conducted by Goldman
Sachs, 10 out of the 91 banks subjected to the tests were
expected to fail.
The Goldman poll of 376 respondents, including hedge funds
and long-only investors, showed European banks were on average
expected to raise 37.6 billion euros ($48.4 billion) in extra
capital following the tests, it said in a note dated July 22.
The Ifo announcement also boosted stocks and commodity
prices, with crude <CLc1> drifting 0.1 percent higher to trade
slightly below $80 a barrel and copper <MCU3> rising 0.9
percent.
IFO, EARNINGS HELP
World stocks measured by MSCI All-Country World Index
<.MIWD00000PUS> advanced 0.6 percent, boosted by a 2.3 percent
rise in Tokyo's Nikkei average <> following robust
quarterly U.S. corporate results.
Microsoft Corp <MSFT.O> easily beat Wall Street forecasts
with a 48 percent rise in quarterly profit.
Europe's FTSEurofirst 300 <> rose 0.4 percent, while
European banks <.SX7P> were flat.
Bund futures <FGBLc1> fell 8 ticks to 128.61 and yields on
10-year benchmark German Bunds <DE10YT=RR> were up 1 basis point
at 2.674 percent.
"It is priced into the market to a large extent that we will
see some banks in Spain fail the stress test. If no Spanish
banks fail, the market will say these tests are worthless," said
Niels From, chief analyst at Nordea in Copenhagen.
"For now, it's really a wait-and-see game and the only
problem is we have to wait till tonight, unless they publish the
results earlier than expected."
(Additional reporting by Neal Armstrong and Ian Chua in
London; editing by John Stonestreet)
