GLOBAL MARKETS-Wall Street stocks climb, dollar drops on rate-cut optimism

* GRAPHIC-World FX rates in 2019: http://tmsnrt.rs/2egbfVh

(New throughout, updates prices, market activity and comments
to close)
By Sinéad Carew
NEW YORK, July 12 (Reuters) - Wall Street stocks closed
higher and the dollar fell on Friday as investors prepared for a
U.S. interest-rate cut, while oil futures were little changed as
a forecast for a global crude surplus offset worries about U.S.
output declines due to a tropical storm.
The U.S. Treasuries yield curve steepened slightly, with
yields largely unmoved by stronger-than-expected producer price
data. Market expectations of an interest rate cut in July held
firm after two days of testimony from Federal Reserve Chair
Jerome Powell. Wall Street's benchmark, the S&P 500 .SPX , and the Dow
Jones Industrial Average rose modestly a day after hitting
record highs. .N
Since Powell reinforced expectations of a July rate cut that
fed a recent rally, the market is "churning before it makes the
next move" during quarterly earnings season that kicks off next
week, said Ken Polcari, managing principal at Butcher Joseph
Asset Management in New York.
Polcari said improving economic data is making investors
cautious over the Fed's rate path.
"Now there's a little trepidation that if the data is coming
in strong why are we cutting rates?" he said. "The market's
thinking he's going to cut rates in July and then that'll be
it."
The Dow Jones Industrial Average .DJI rose 243.95 points,
or 0.9%, to 27,332.03, the S&P 500 .SPX gained 13.86 points,
or 0.46%, to 3,013.77 and the Nasdaq Composite .IXIC added
48.10 points, or 0.59%, to 8,244.14.
All three stock indexes registered their second weekly
advance in a row ahead of the start of second-quarter corporate
earnings season. Analysts are forecasting a decline in S&P 500
earnings per share of 0.4% for the quarter, according to I/B/E/S
data from Refinitiv.
"Most of the gains this year have been from multiple
expansion. Earnings needs to start doing its part. Otherwise you
risk people looking at multiple expansion saying this looks like
a top," said Michael Antonelli, market strategist at Robert W.
Baird in Milwaukee.
The pan-European STOXX 600 index .STOXX rose 0.04% and
MSCI's gauge of stocks across the globe .MIWD00000PUS gained
0.30%.
U.S. producer prices rose slightly in June as a rising cost
of services was offset by cheaper energy costs, beating
economists' expectations that prices would be unchanged.
The Labor Department report comes on the heels of strong
consumer price data on Thursday, suggesting overall inflation
could continue to rise moderately. "One individual dataset will not sway or set" the Fed's
decision on interest rates, said Michael Lorizio, senior fixed
income trader at Manulife Investment Management.
In Treasuries, benchmark 10-year notes US10YT=RR last rose
2/32 in price to yield 2.1149%, from 2.12% late on Thursday.
In currencies, continued bets on a U.S. rate cut sent the
dollar lower for the third day in a row. The dollar
index .DXY , which tracks the greenback against six major
peers, fell 0.23%, with the euro EUR= up 0.15% to $1.1269.
The Japanese yen strengthened 0.59% versus the greenback at
107.87 per dollar.
Oil prices inched up as U.S. Gulf of Mexico crude output was
halved by disruptions caused by a tropical storm. Gains were
limited after the International Energy Agency forecast a large
global crude inventory build in coming months . U.S. crude futures settled up 1 cent at $60.21 per barrel,
resulting in a 4.7% rise for the week while Brent crude ended up
20 cents at $66.72, with a weekly gain of 4%. Both benchmarks
fell last week. O/R
Gold prices nudged higher as investors shrugged off concerns
that the stronger-than-expected U.S. consumer inflation could
influence the Fed's decision on aggressive monetary policy
easing. GOL/ Spot gold XAU= added 0.8% to $1,414.22 an ounce.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC-China trade shock https://tmsnrt.rs/32qsJDt
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>