Stocks up, dollar ahead 1 pct vs yen, as China's economy slows

NEW YORK (Reuters) - European and Asian equities rose on Tuesday and the dollar climbed 1 percent against the Japanese yen as diminishing global growth prospects bolstered hopes for central bank stimulus, though U.S. stocks fell.

Crude oil prices fell after the International Monetary Fund cut its 2015 global economic forecast on lower fuel demand and key producer Iran hinted that prices could drop to $25 a barrel without supportive OPEC action.

U.S. crude futures were last off 3 percent to $47.04 per barrel, keeping the commodity - which has fallen more than 55 percent since June - near its lowest level since 2009.

The greenback strengthened on the IMF forecasts, which showed the United States on a faster growth trajectory than most other major economies. The outlook came after China reported a growth rate that showed the nation's economy was running at its slowest pace in 24 years, though growth was better than many in markets had feared.

China's economy grew 7.4 percent in 2014, just below the official 7.5 percent target but above the 7.3 percent projected by analysts.

The dollar climbed on Tuesday to a one-week high against the yen, at 118.775 yen , as the Chinese data stirred speculation among currency traders that Japan's central bankers may ease policy and curb demand for the safe-haven Japanese currency. The dollar was last at 118.70 yen.

The IMF cut its forecast for global growth in 2015 by three-tenths of a percent to 3.5 percent and called on governments and central banks to pursue accommodative monetary policies and reforms.

"The upside to seeing less international growth is that it is now very unlikely the Federal Reserve will raise interest rates mid-year," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Expectations the European Central Bank would announce later this week plans to inject more stimulus into the euro zone economy helped lift European shares to a seven-year high and buoyed investor appetite for risk. The pan-European FTSEurofirst 300 <.FTEU3> ended 0.9 percent higher.

Wall Street was led lower by consumer discretionary and health care shares. The Dow Jones industrial average <.DJI> fell 0.6 percent to 17,406.83, while the S&P 500 <.SPX> was down 0.43 percent. Shares of Johnson & Johnson were down more than 3 percent after the company said the stronger dollar hurt quarterly sales.

U.S. government bond prices rose. The benchmark 10-year note was up 8/32 to yield 1.7780 percent. The 30-year jumped 1 point and yielded 2.3940 percent.

Record low yields on German and other European sovereign debt fed demand for U.S. Treasuries, which pay far higher yields, even as the Federal Reserve is expected to increase interest rates this year as the U.S. economy improves.

The worries about global economic growth helped lift gold prices 1.5 percent to highs last seen in August. Spot gold was last at $1,294.20 an ounce after touching a session high of $1,297, according to Thomson Reuters data.

(Reporting by Michael Connor in New York; Editing by Leslie Adler)

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