* European shares dip, banks in focus after stress tests
* Global index hits highest since mid-August
* Oil prices keep falling after 15 percent July loss
* U.S. dollar recoups losses after worst week in 3 months (Updates to open of U.S. markets, changes byline, dateline, previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Aug 1 (Reuters) - Global equity prices steadied near their highest in almost a year on Monday as investors pared expectations of any near-term rise in U.S. interest rates, but lower oil prices kept a lid on gains.
Oil prices fell more than 3 percent on worries over OPEC output. The U.S. dollar recovered some ground against a basket of major currencies after its worst week in three months. Street was little changed but a slight advance earlier in the session allowed the S&P 500 to post a fresh intraday record high. The index has remained in a very tight range over the past 13 sessions and is struggling for direction.
"The economic data until last week had been pretty decent but since the (U.S.) GDP numbers came out, we're seeing holes in the argument that the second half of the year is going to be better," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
"At these valuations, the market is desperate for a catalyst to move higher."
Growth in U.S. gross domestic product in the second quarter came in below expectations on Friday, fuelling speculation that the Federal Reserve may not pull the trigger on raising interest rates anytime soon.
On Monday, data showed that U.S. manufacturing activity slowed in July as orders fell broadly, while a drop in construction spending in June suggested a downward revision to the second-quarter economic growth estimate. Dow Jones industrial average .DJI fell 52.28 points, or 0.28 percent, to 18,379.96, the S&P 500 .SPX lost 4.92 points, or 0.23 percent, to 2,168.68 and the Nasdaq Composite .IXIC added 15.95 points, or 0.31 percent, to 5,178.08.
The S&P Energy index .SPNY , down 2.7 percent, was the biggest loser among S&P 500 sectors.
MSCI's world stocks index .MIWD00000PUS , which tracks shares in 45 nations, was last down 0.11 percent. Earlier in the session the index touched its highest level in nearly a year.
Europe's broad FTSEurofirst 300 index .FTEU3 was down 0.61 percent at 1,339.15. European stocks initially rose but gave up gains as bank shares turned broadly negative following Friday's release of stress tests on 51 European Union lenders. prices fell with U.S. crude hitting April lows, weighed by a survey showing output in OPEC reached record highs last month and by the biggest addition of U.S. oil rigs in two years. crude LCOc1 was down 3.2 percent at $42.14 a barrel, while U.S. crude CLc1 was down 3.5 percent at $40.14.
The dollar index .DXY rebounded helped by gains against the yen, which pulled back from three-week highs reached on Friday after the Bank of Japan eased policy less aggressively than expected. dollar index, which tracks the greenback against six major currencies, was up 0.14 pct to 95.665.
In bond markets, U.S. Treasury yields rose from Friday's multi-week lows on anticipation of a corporate bond offering from Microsoft MSFT.O , with profit-taking also fueling the move. 10-year Treasuries prices US10YT=RR were last down 8/32 to yield 1.487 percent, after touching a more than two-week low in yield of 1.450 percent on Friday.
Spot gold prices XAU= were up 0.1 percent to $1,352 an ounce.