* September U.S. rates "liftoff" back on table
* Dollar index at highest since April
* Solid earnings boost European stocks
By Jamie McGeever
LONDON, Aug 5 (Reuters) - The dollar rose to its highest in
more than three months and U.S. Treasury yields rebounded from
two-month lows on Wednesday, after a Federal Reserve official
said the central bank was close to raising interest rates.
The comments on Tuesday from Atlanta Federal Reserve
President Dennis Lockhart, regarded as one of the Federal Open
Market Committee's centrist policymakers, put next month back on
the table for the first U.S. rate hike in almost a decade.
Solid European corporate earnings, notably from French bank
Societe Generale SOGN.PA , boosted stocks after Lockhart's
comments and a slide in Apple shares AAPL.O soured sentiment
the previous day.
The dollar's strength kept gold prices anchored near recent
five-year lows, though oil clawed back a small part of the 20
percent it has lost in the past month.
"The market has been wrong-footed once more by the Federal
Reserve," said Kathleen Brooks, research director at FOREX.com.
"A rate hike cometh - time for the market to play catch up."
The dollar index, which measures it against a basket of
currencies, rose to 98.218 .DXY , its highest since April 23.
The greenback was close to multi-year highs against emerging
market currencies including the South African rand ZAR= ,
Brazilian real BRL= and Indonesian rupiah IDR= .
The euro fell 0.25 percent to a two-week low of $1.0847
EUR= .
DON'T FIGHT BULL MARKET
Investors narrowed the odds on a September U.S. rate hike,
with Fed fund futures 0#FF: implying around a 1-in-2 chance,
compared with around 1-in-3 after weak wage growth data last
week.
Yields on 10-year Treasury notes US10YT=RR rose 3 basis
points on the day to 2.24 percent, having hit two-month lows
around 2.14 percent earlier this week.
In stocks, Europe's index of the leading 300 shares .FTEU3
was up 0.8 percent at 1,593 points, Britain's FTSE 100 .FTSE
was up a third of one percent and Germany's DAX .GDAXI up 1
percent.
France's CAC 40 .FCHI was also up 1 percent, led by a 8.5
percent surge in SocGen shares after the bank reported
second-quarter results that beat analysts' forecasts.
A report on Spain's service sector, which showed the fastest
pace of growth in three months and strongest hiring in eight
years, also boosted investor sentiment in Europe.
Earlier in Asia, Japan's Nikkei .N225 rose 0.5 percent but
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS slipped 0.2 percent.
In China, the CSI300 index .CSI300 of the largest listed
companies in Shanghai and Shenzhen was flat after curbs on
short-selling prompted a sizable bounce on Tuesday.
There were also signs Chinese consumers could be taking over
from manufacturers as the driving force for growth as the
Caixin/Markit survey of services climbed to its highest in 11
months. ID:nS7N0ZB00A
Losses on Wall Street on Tuesday had been modest with the
Dow .DJI ending 0.27 percent lower, while the S&P 500 .SPX
eased 0.22 percent and the Nasdaq .IXIC 0.19 percent.
Apple AAPL.O hit its lowest in over six months, apparently
in part on worries about demand in China.
U.S. futures pointed to a higher open on Wall Street on
Wednesday SPc1 .
"Rate hikes eventually burst bubbles, but it usually takes
at least three. We think it is still too early to fight this
bull market," Citi's U.S. equity strategy team said in a note to
clients.
In commodity markets, Brent oil LCOc1 rose 1 percent to
$50.46 a barrel and U.S. crude CLc1 gained 0.8 percent to
$46.12, while gold eased to $1,085 an ounce XAU= .
(Editing by John Stonestreet; To read Reuters Global Investing
Blog click on http://blogs.reuters.com/globalinvesting; for the
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