Global shares gain on China stimulus, dollar rises

NEW YORK (Reuters) - Global equity markets snapped back on Monday from a worldwide decline the previous session on China's steps to stimulate its economy and solid corporate earnings, while the euro weakened amid worries that Greece may default.

European stocks shrugged off declines in Asia where Chinese shares fell sharply on fears of a regulatory crackdown on the world's hottest stock market, which offset the People's Bank of China's most aggressive move yet to bolster the slowing economy.

The Chinese central bank reduced the amount of cash banks must hold as reserves in a move to help spur lending and combat a slowing economy.

"What's helped the market today is the story about more stimulus in China," said Rick Meckler, president of hedge fund LibertyView Capital Management in Jersey City, New Jersey.

The stimulus aims to overcome a stubborn lack of growth and U.S. equity investors are responding to earnings that are good but not enough to push shares to new record highs, Meckler said. The U.S. stock market remains range-bound, he said.

In Europe, mining stocks helped Britain's top share index rebound on China's stimulus measures to support stuttering growth in the world's biggest consumer of metals. The FTSE 350 mining index <.FTNMX1770> rose 1.9 percent.

MSCI's all-country world index <.MIWD00000PUS> rose 0.43 percent while the pan-European FTSEurofirst 300 index <.FTEU3> of top regional shares gained 0.8 percent to 1,619.92.

Shares also rose on solid corporate results. Investment bank Morgan Stanley reported its most profitable quarter since the financial crisis. Shares rose 1.1 percent to $37.17.

On Wall Street, the Dow Jones industrial average <.DJI> rose 226.05 points, or 1.27 percent, to 18,052.35. The S&P 500 <.SPX> gained 18.14 points, or 0.87 percent, to 2,099.32 and the Nasdaq Composite <.IXIC> added 41.83 points, or 0.85 percent, to 4,973.64.

The euro slid against the dollar amid worries that Greece might leave the single currency zone. The euro was down 0.46 percent at $1.0755. Against the yen , the dollar rose 0.36 percent to 119.33 yen while the dollar index <.DXY> rose 0.25 percent to 97.773.

Government debt yields continued to vanish across the euro zone. Belgium became the sixth euro zone country to sell five-year bonds at a negative yield after Finland, Germany, Austria, the Netherlands and France.

The benchmark 10-year German bund fell in price, pushing its yield up to 0.077 percent, up from a record low of 0.05 percent on Friday.

Oil prices rose in volatile trading as tensions in the Middle East and a drop in the number of U.S. rigs drilling for crude offset comments from Saudi Arabia's oil minister that Saudi production would stay near record levels in April.

Brent crude was up 81 cents at $64.26 a barrel. U.S. crude for May delivery was up $1.32 at $57.06.

(Reporting by Herbert Lash; Editing by James Dalgleish)

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