Oil up on U.S. production bets, global stocks flat

NEW YORK (Reuters) - Crude prices rose on Tuesday after a surprise drop in expectations for U.S. shale oil production while the dollar fell and stocks edged lower with investors focused on U.S. corporate earnings and retail sales data.

U.S. stocks were little changed as gains in banks JPMorgan and Wells Fargo were offset by a full-year earnings forecast downgrade from Johnson & Johnson due to the impact of dollar strength.

"This is probably baked into the stock because J&J is such a core holding, but we are watching global companies to see how they were impacted by the dollar, and this suggests the impact could be worse than we thought," said Terry Morris, senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania.

The Dow Jones industrial average <.DJI> rose 36.27 points, or 0.2 percent, to 18,013.31, the S&P 500 <.SPX> gained 0.53 point, or 0.03 percent, to 2,092.96 and the Nasdaq Composite <.IXIC> dropped 18.00 points, or 0.36 percent, to 4,970.25.

The FTSEurofirst 300 <.FTEU3> index of top European shares was down 0.5 percent after touching its highest since November 2000. Investors were spooked by a report that cash-strapped Greece was preparing for a debt default, despite a denial from its prime minister.

DOLLAR TUMBLES

Despite its recent strength, the U.S. dollar was on the back foot on Tuesday after U.S. retail sales rose in March for the first time since last year but at a slower pace than expected.

The euro strengthened 1 percent against the greenback at $1.0671 following six consecutive sessions of losses. The dollar index <.DXY> fell 0.9 percent.

Crude oil rose after a forecast that U.S. shale oil output would record its first monthly decline in more than four years and on tensions in Yemen, where neighboring top oil exporter Saudi Arabia is embroiled in a civil war. [O/R]

Brent gained 1 percent to $58.51 a barrel while U.S. crude added 2.5 percent to $53.23.

U.S. Treasury yields fell after the retail sales data added to bets the Federal Reserve was unlikely to increase interest rates in June.

The benchmark 10-year Treasury note rose 23/32 in price to yield 1.8602 percent, down from 1.939 percent late on Monday.

Gold dropped for a fifth session in six, down 0.2 percent at $1,195.98 an ounce.

(Additional reporting by Anirban Nag and Francesco Canepa in London, Wayne Cole in Sydney and Ryan Vlastelica and Karen Brettell in New York; Editing by James Dalgleish)