* Equities rise on hopes for financial earnings
* Goldman Sachs, U.S. retail sales support mood
* European shares up 0.8 percent, Japan gains 2.3 percent
* Dollar mixed, 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 and Goldman
Sachs kept the mood buoyant with a strong set of earnings.
U.S. retail sales for June also came in better than
expected, reinforcing upbeat sentiment.
Wall Street looked set for a positive start and the dollar
recovered early weakness.
World stocks as measured by MSCI <.MIWD00000PUS> were up 1
percent and the emerging markets sector index <.MSCIEF> jumped
2.4 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 reported a 33 percent rise in quarterly earnings as
a strong gain in trading was offset by a one-time charge to
repay government loans.
"They outperformed everybody's expectations which is not
particularly unusual," said Richard Bove, analyst at Rochdale
Securities. "I think it's a pretty strong signal that other
capital market companies will do well.
Bank of America Corp, JPMorgan Chase & Co and Citigroup Inc
will report 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 1 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 recovered some earlier losses and the yen was
under pressure.
The dollar index, a gauge of its performance against six
major currencies was flat, off its lows at 80.07. <.DXY>
The dollar was up a quarter of a percent at 93.16 yen after
hitting a five-month low of 91.73 yen on electronic trading
platform EBS on Monday. <JPY=>
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
5 basis points to 1.253 percent, while the 10-year Bund
yield gained 6 basis points to 3.334 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
Mike Peacock)
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