Global shares rally on hopes for Greek deal; U.S. yields rise

NEW YORK (Reuters) - U.S. and European shares rose on Tuesday on hopes for a debt agreement between Greece and its major creditors, while U.S. Treasury yields rose on continued expectations of a Federal Reserve interest rate hike this year.

European Commission President Jean-Claude Juncker stepped up contacts with Greece's new leftist leader to try to bridge differences on the country's debt crisis but EU officials cautioned against expecting a breakthrough this week. Earlier, reports of a possible agreement helped shares rebound ahead of a meeting of the bloc's finance ministers Wednesday.

German Finance Minister Wolfgang Schaeuble, however, denied that Greece had come to an agreement with the Commission and said the ministers would not negotiate a new program.

Coca-Cola Co shares boosted the Dow and the S&P 500 after the company reported a bigger-than-expected profit and its first increase in North American sales, its biggest market, in four quarters. Shares were last up 3.1 percent at $42.51. [ID:nL1N0VK28J]

The U.S. benchmark S&P 500 was last up more than 1 percent, even as declining oil prices sent the S&P energy index <.SPNY> down 0.2 percent.

"Anything that makes us believe we can avoid a sloppy Greek exit is going to be a positive for markets overall, and that is where we are at right now," said Art Hogan, chief market strategist at Wunderlich Securities in New York.

U.S. Treasury yields rose, with those on benchmark 10-year notes surpassing 2 percent to their highest in a month on heightened expectations that the Fed, the U.S. central bank, would hike rates from rock-bottom lows this year after strong U.S. jobs data last Friday.

"We are still showing some of the hangover from the good nonfarm payrolls report on Friday," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott LLC in Philadelphia.

Oil prices slipped, ending a three-day rally, after the International Energy Agency warned that ample supplies will raise global inventories before investment cuts begin to significantly dent production. [ID:nL4N0VK1N7]

The Dow Jones industrial average <.DJI> was last up 0.78 percent, at 17,868.1. The S&P 500 <.SPX> was up 1.04 percent, at 2,067.96 and the Nasdaq Composite <.IXIC> was up 1.26 percent, at 4,785.33.

In Europe, the FTSEurofirst 300 index <.FTEU3> of top regional shares ended 0.57 percent higher, at 1,488.39. MSCI's all-country world stock index <.MIWD00000PUS> was last up 0.51 percent, at 421.0.

The rise in Treasury yields helped the U.S. dollar hit a one-month peak against the safe-haven Japanese yen of 119.61 yen . The dollar index <.DXY>, which tracks the greenback versus a basket of six currencies, was last up 0.28 percent, at 94.711. [ID:nL1N0VK2CS]

Brent crude settled down $1.91 at $56.43 a barrel. U.S. crude settled down $2.84 at $50.02 a barrel. [ID:nL4N0VK1N7]

The uptick in the dollar led gold to stall the previous day's rise, preventing a steeper recovery from Friday's three-week low. Spot gold prices were last down $5.9 at $1,233.03 an ounce.

(Reporting by Sam Forgione; Additional reporting by Marc Jones in London and Chuck Mikolajczak and Michael Connor in New York; Editing by James Dalgleish and Andrew Hay)

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