* Global, emerging stocks lifted by data, earnings
* Europe weaker after stress tests, but banks firm
* Europe rises against dollar.
By Jeremy Gaunt, European Investment Correspondent
LONDON, July 26 (Reuters) - Robust U.S. company earnings and
surprisingly vigorous euro zone economic data generally trumped
investor scepticism about European bank stress tests on Monday
to lift global stocks and bolster the euro against the dollar
Emerging market stocks were at a 2-1/2 month high.
There was weakness on European bourses, but banking stocks
<.SX7P>, the key test, were flat to higher on the first trading
day following the release of a broad report showing most
financial institutions to be in relatively good shape.
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Concern that the tests were not tough enough remained -- not
considering sovereign debt default, for example -- but investors
were generally being driven by more positive indicators.
"Overall, we do not think that the stress result was a big
success, but the market seems to be treating it as a non-event,"
BNP Paribas said in a note.
Investors were surprised last week by a series of reports
showing the broader European economy to be stronger than
thought.
Purchasing managers' indexes indicated third-quarter euro
zone growth of around 0.6-0.7 percent, double the 0.3 percent
forecast in the most recent Reuters poll. German business
sentiment also posted a record jump in July to its highest level
in three years.
Non-euro zone member Britain added to the mix with an
economy growing twice as fast as expected in the second quarter.
Wall Street also weighed in with some bullish news on
Friday, when U.S. conglomerate General Electric increased its
quarterly dividend by 20 percent.
The wide-ranging impact GE has on the U.S. economy, coupled
with another round of strong earnings, bolstered investor
confidence.
World stocks as measured by MSCI <.MIWD00000PUS> were up 0.2
percent and the Thomson Reuters global stock index <.TRXFLDGLPU>
gained about the same.
The FTSEurofirst 300 <> lost 0.4 percent.
EURO FIRMS
The euro firmed against the dollar as investors bought into
riskier assets. German government bonds fell in early trade.
The euro rose 0.2 percent from late U.S. trade on Friday to
$1.2940 <EUR=>. It earlier rose as high as $1.2958.
Data from the Commodity Futures Trading Commission showed
currency speculators cutting down net short positions in the
euro. (IMM/FX].
Looking at interbank lending following the stress tests,
Jose Carlos Diez, chief economist at Intermoney in Madrid was
asked by Reuters Insider whether there is a risk that failed
Spanish cajas will be frozen out.
"Tension in the money market will continue," he said.
"(It is) very difficult to open the credit lines, that
process will be very slow. Of course, we suffered a lot of
tension in the last two months and I think up to the end of the
year, we'll stabilise the access and situation of our banking
system."
(Editing by Toby Chopra)
