* Wall Street flat after retail sales, sentiment data
* Safe-haven bonds rally on poor U.S. retail sales
* Dollar up vs yen on consumer data; euro rally fizzles
* Oil slips below $74 after US retail sales data (Adds close of European markets)
By Herbert Lash
NEW YORK, June 11 (Reuters) - World stocks and the dollar rose on Friday after a surprisingly strong reading of U.S. consumer sentiment suggested the economic recovery remains intact, easing jitters over an unexpected drop in U.S. retail sales.
European shares closed higher for a third day as investors focused on the survey of U.S. consumer sentiment in early June, which rose to its strongest level since March 2008.
European shares also rose after supportive comments from UK officials helped BP <BP.L><BP.N> rebound, and risk-sensitive banks gained as investors took heart from the U.S. consumer sentiment data. For details see: [
]Deutsche Bank <DBKGn.DE>, HSBC <HSBA.L> and BNP Paribas <BNPP.PA> all gained.
U.S. stocks were largely lower, with the Dow industrials and the broad S&P 500 down slightly as the 1.2 percent drop in May retail sales reported by the Commerce Department raised questions about the strength of the U.S. economic recovery. [
]But the technology-heavy Nasdaq rose on strength in semiconductor stocks after National Semiconductor Corp <NSM.N> forecast revenues above estimates, a sign that demand is bouncing back after a miserable 2009 for the microchip industry.
"The real economy is moving forward and a lot of numbers have come in quite well this week," said Heino Ruland, strategist at Ruland Research in Frankfurt.
MSCI's all-country world equity index <.MIWD00000PUS> was up 0.5 percent, helped by the rally in European markets. The pan-European FTSEurofirst <
> closed up 0.5 percent to 1,018.87 points, driving a 2 percent gain for the week.Shares of BP <BP.L> recovered 7.2 percent after hitting a 13-year low on Thursday, as investors welcomed support from British politicians for the oil major and points to hopes that its dividend might be deferred rather than cut. The stock is still down nearly 40 percent since April when the oil spill in the Gulf of Mexico began.
At 12:30 p.m., the Dow Jones industrial average <
> was down 33.41 points, or 0.33 percent, at 10,139.12. The Standard & Poor's 500 Index <.SPX> was down 3.92 points, or 0.36 percent, at 1,082.92. The Nasdaq Composite Index < > was up 3.48 points, or 0.16 percent, at 2,222.19.The dollar rose against the yen and euro on the U.S. consumer sentiment report. Lingering worries about euro zone debt and technical barriers contributed to the euro's decline, ending a three-day winning streak that took it as high as $1.2150. [
]The euro <EUR=> was down 0.35 percent at $1.2066, while the dollar rose against a basket of major currencies. The U.S. Dollar Index <.DXY> was up 0.43 percent at 87.545.
RBS Securities strategist Alan Ruskin said the better-than-expected rise in Thomson Reuters/University of Michigan's Surveys of Consumers was "quite a pleasant surprise," particularly given the recent backdrop of market volatility and stock market weakness.
German government bond prices snapped back and U.S. Treasuries rebounded a day after sharp losses as the weak U.S. retail sales data revived safe-haven buying of government bonds. [
]The benchmark 10-year note <10YT=RR> was last up 19/32 in price to yield 3.26. The 30-year long bond <US30YT=RR> rallied more than a point in price and was last up 1-4/32 in price to yield 4.17 percent versus Thursday's close of 4.24 percent.
Oil prices slid below $74 a barrel after the unexpected dip in U.S. retail sales, which renewed concerns about the recovery in the world's largest energy consumer. [
]U.S. light sweet crude oil <CLc1> fell $1.61, or 2.13 percent, to $73.87 a barrel.
ICE Brent <LC0c1> was trading down $1.62 at $73.67.
"The retail sales number put a damper on things and the report on Chinese inflation had already helped pull oil back," said Robert Yawger, senior vice president, energy futures at MF Global in New York.
Fresh data showed inflation in the world's third-largest economy quickened to a 19-month high in May while its factory output and capital spending moderated. [
]Spot gold prices <XAU=> rose $6.75, or 0.55 percent, to $1,224 an ounce.
Earlier in Asia, the MSCI index of Asia Pacific ex-Japan stocks <.MIAPJ0000PUS> rose nearly 1.7 percent. Japan's Nikkei average <
> climbed 1.7 percent, helped by a halt in the yen's advance against the euro <EURJPY=R>. (Reporting by Steven C. Johnson and Burton Frierson in New York; Emma Farge, George Matlock, Jan Harvey and Michael Taylor in London and Lucia Mutikani in Washington; writing by Herbert Lash; Editing by Leslie Adler)