* U.S., European shares rise as government bonds fall
* Oil rises above $50/bbl on Gaza, Russia-Ukraine worries
* Dollar climbs for third day versus major currencies
By Vivianne Rodrigues
NEW YORK, Jan 6 (Reuters) - Stocks rose across the globe on
Tuesday, extending an advance which began last week as
investors bet on a world-wide economic recovery, while
political events drove oil briefly above $50 a barrel.
Technology shares led among gainers on Wall Street and the
U.S. dollar extended a three-day rally versus most major
currencies, particularly the euro.
The stronger dollar weighed on gold, which fell to a
two-week low, while concerns about a massive pending supply of
government debt needed to pay for an economic rescue pushed
bond yields to their highest level in three weeks.
Investors looked past weak U.S. economic data and focused
on U.S. President-elect Barack Obama's stimulus plan, which has
been helping fuel a tentative recovery in the world's stock
markets.
The stimulus plan may also include $310 billion in tax cuts
as part of a $775 billion package.
German politicians also debated tax cuts to revive Europe's
largest economy. For details, see []
In midday trading in New York, the Dow Jones industrial
average <> was 0.3 percent higher at 8,982.12 and the
Nasdaq Composite Index <> traded 1 percent higher at
1,643.93.
The pan-European FTSEurofirst 300 index of top European
shares closed up 1.6 percent <>. It has now gained around
18 percent since hitting a low in late November.
"The main things are the Obama plans as well as the German
fiscal stimulus package," said Bernard McAlinden, market
strategist at NCB Stockbrokers. "Markets, rather than focusing
on the dire economic and earnings data, are looking forward to
the hope that these plans will work."
In Japan, the Nikkei 225 <> closed up 0.4 percent and
the MSCI index of Asia-Pacific stocks outside Japan edged up
for a seventh straight day, gaining 0.48 percent
<.MIASJ0000PUS>.
Higher oil prices helped boost shares of energy companies,
but sharp gains in energy prices may cause some headline
inflation problems later for central banks intent on cutting
interest rates, analysts said.
Crude hit a one-month high above $50 a barrel, driven
higher by heightened concern about supply disruptions stemming
from Israel's incursion into Gaza and a dispute between Russia
and Ukraine over natural gas.
"Oil prices continue to be supported by political issues,
whether they be gas or Gaza-related," Rob Laughlin, broker at
MF Global, said.
U.S. crude prices rose $1.25 to $50.06 a barrel after
gaining 5 percent overnight <CLc1>. Prices were last 0.2
percent higher at $48.92 a barrel.
DOLLAR JUMPS
The dollar jumped nearly 1.5 percent against a basket of
currencies <.DXY>, particularly gaining against the euro, which
fell sharply on speculation the European Central Bank will cut
interest rates further as price pressures ease and euro-zone
economies weaken.
The dollar rose even as reports showed a steep drop in
factory orders and pending home sales in November.
[]
"Economic data in the euro zone is just as terrible as it
is in the U.S. but U.S. officials have been very pro-active,
actually the most pro-active in combating the recession," said
Matt Esteve, a foreign exchange trader, Tempus Consulting in
Washington.
"With Barack Obama basically saying he's willing or ready
to do what is needed to help the economy out of recession, it's
definitely a dollar-positive."
The euro fell around 1.6 percent to $1.3401 <EUR=>
according to Reuters data. Against the yen, the dollar rose 1
percent to 94.08 yen <JPY=>.
The dollar's gains pushed gold futures to a two-week low.
Gold for February delivery <GCG9> was down $2.80 to $854.90,
off earlier lows near $846.90.
U.S. Treasury debt prices fell, while benchmark yields rose
to the highest in three weeks.
Benchmark 10-year Treasury notes <US10T=RR> were trading
28/32 lower in price for a yield of 2.57 percent compared with
2.48 percent late on Monday. The benchmark yield was trading at
its highest since mid-December.
On euro-zone government bond markets, the interest
rate-sensitive 2-year Schatz yield <EU2YT=RR> was flat at 1.694
percent, while 10-year Bund yields were up 4 basis points at
3.058 percent.
(Additional reporting by Gertrude Chavez-Dreyfuss, Chris Reese
in New York and Jeremy Gaunt in London; Editing by Tom Hals)
