* Equities rise on hopes for financial earnings
* Goldman Sachs in focus
* European shares up 1 percent, Japan gains 2.3 percent
* Dollar, yen weaker
By Jeremy Gaunt, European Investment Correspondent
LONDON, July 14 (Reuters) - A burst of confidence in U.S.
financial stocks lifted global equities on Tuesday ahead of
results for bellwether Goldman Sachs.
The dollar was slightly weaker against major currencies,
following a recent trend of falling when appetite for equities
and other riskier assets rises.
World stocks as measured by MSCI <.MIWD00000PUS> were up 1
percent and the emerging markets sector index <.MSCIEF> jumped
more than 2 percent.
"We are going into the earnings season so the optimists will
look for signs of a confirmation of recovery," said Jonathan
Lawlor, head of European research at Fox-Pitt, Kelton.
Wall Street rallied more than 2 percent on Monday after
bullish comments on financial sector performance by analyst
Meredith Whitney lifted hopes that banks' quarterly results may
be stronger than expected.
At the same time, the VIX <.VIX> volatility index, sometimes
called the fear gauge, had its biggest daily percentage drop
since March 10, the day this year's stock market rally started.
Goldman will release earnings results later on Tuesday,
followed by Bank of America Corp, JPMorgan Chase & Co and
Citigroup Inc later in the week.
European equities were extending the previous session's
sharp gains, lead by banks and miners.
The FTSEurofirst 300 index of top European shares was up 0.8
percent after surging 2 percent on Monday.
Earlier, Japan's Nikkei average gained 2.3 percent to snap a
nine-day losing streak.
"After a recent bearish run, the market has been looking for
an opportunity to rebound," said Yutaka Miura, senior technical
analyst at Mizuho Securities.
DOLLAR, YEN PRESSURED
The dollar and yen were under pressure as risk appetite
improved on the back of rising equity prices.
Currencies perceived as higher risk such as the Australian
dollar rose, also buoyed by a robust business conditions report.
The dollar index, a gauge of its performance against six
major currencies, fell 0.1 percent to 79.984. <.DXY>
The dollar was flat against the yen at 93.04 yen after
hitting a five-month low of 91.73 yen on electronic trading
platform EBS on Monday. <JPY=>
"The key will be not just the financial sector but other
sectors and if they post more optimistic forecasts going
forward," said Lee Hardman, currency economist at Bank of
Tokyo-Mitsubishi UFJ.
Euro zone government bonds were also under pressure.
In the cash market, bond yields, which move inversely to
prices, all rose. The two-year Schatz yield climbed
almost 5 basis points to 1.267 percent, while the 10-year Bund
yield gained 3 basis points to 3.305 percent.
"Given the rally we've had, the risk is to the downside,"
said a bond trader in London.
(Additional reporting by Atul Prakash and Ian Chua; Editing by
Ruth Pitchford)
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