(Updates prices, adds Wall Street outlook)
By Jeremy Gaunt, European Investment Correspondent
LONDON, July 21 (Reuters) - Global stocks picked up last
week's rally on Monday, sharply boosted by easing concerns about
banking earnings, while oil firmed to around $130 a barrel and
the dollar weakened.
Wall Street looked set for a positive start, particularly
after Bank of America <BAC.N> reported far higher-than-expected
second-quarter earnings.
It built on higher-than-expected results from JPMorgan
<JPM.N>, Citigroup <C.N> and IBM <IBM.N> last week.
"The results could set the stage for equity performance for
the rest of the week giving tailwinds for the dollar," said John
Hydeskov, senior FX analyst at Danske Markets in Copenhagen.
European shares kicked off the week on a softer note but
then reversed with the FTSEurofirst 300 <> index of top
European shares was standing more than 1 percent higher.
They were led higher by oil company stocks, which tracked
the higher crude price, and by HSBC <HSBA.L>, which gained on a
newspaper report of stake interest from a Chinese sovereign
wealth fund.
The positive sentiment from banking results, however, has
been somewhat tempered by lower-than-forecast results from
technology sector bellwethers such as Google Inc <GOOG.O> and
Microsoft Corp <MSFT.O>.
British lender HBOS <HBOS.L> also added some worry.
It dropped 2 percent after it said shareholders subscribed
for just 8.3 percent of shares in its 4 billion pound ($8
billion) rights issue, leaving its underwriters to try to sell
almost 3.8 billion pounds of stock.
OIL FIRMS, DOLLAR DRIFTS
Oil was up around $1.60 a barrel above $130.50 following the
biggest one-week slide on record as inconclusive talks between
Iran and world powers over Tehran's disputed nuclear programme
dimmed prospects of ending the row.
Prices were also lifted by worries about Tropical Storm
Dolly, the first storm of the 2008 Atlantic hurricane season
that could disrupt oil production in the Gulf of Mexico.
The dollar slipped, staying near a record low against the
euro.
"We're waiting to see the degree to which markets,
particularly equities, are starting to stabilise after the
recent mayhem," said Stephen Koukoulas, global strategist at TD
Securities.
The euro edged up slightly to $1.5860 <EUR=>, hovering in
range of a record high of $1.6038 last week. The dollar fell 0.1
percent to 107.08 yen <JPY=>, while the euro hit an all time
record high of 169.92 yen <EURJPY=>.
Euro zone government bonds extended losses after the Bank of
America results.
Two-year bond yields <EU2YT=RR> were up 7 basis points at
4.607 percent while 10-year yields <EU10YT=RR> were 3 basis
points higher at 4.618 percent.
(Additional reporting by Simon Falush; Editing by Ron Askew)
