* September U.S. interest rate "liftoff" back on table
* Crude oil rises for second day after U.S. inventories fall
* U.S. dollar index at highest since April
(Adds close of European bond, stock markets)
By Herbert Lash
NEW YORK, Aug 5 (Reuters) - The U.S. dollar rose against
major currencies on Wednesday after data showed the pace of
growth in the U.S. service sector surged in July to its best
level in a decade, lifting most stocks on Wall Street while
solid corporate earnings pushed equities higher in Europe.
Led by sharp increases in business activity, employment and
new orders, the U.S. Institute for Supply Management's services
sector index rose to 60.3, its highest reading since August
2005, beating expectations of 56.2.
The data backed views the Federal Reserve will raise
interest rates in September after weaker-than-expected private
hiring figures for July released earlier on Wednesday briefly
raised doubts about a rate hike next month.
"For most people watching the market, whether it's September
or December isn't that critical, most people are assuming it
will happen this year. They've already factored that in to the
way they look at the market," said Rick Meckler, president of
hedge fund LibertyView Capital Management LLC in Jersey City,
New Jersey.
The dollar also gained after Atlanta Federal Reserve
President Dennis Lockhart, regarded as a centrist policymaker,
on Tuesday put September back on the table for the first U.S.
rate rise in almost a decade in an interview with The Wall
Street Journal.
Lockhart said it would take "significant deterioration" in
the U.S. economy for him to not support a rate hike next month.
Against the yen, the greenback rose to a two-month high with
the U.S. dollar index .DXY up 0.06 percent at 97.991.
In equity markets, the Dow Jones industrial average .DJI
fell 20.64 points, or 0.12 percent, to 17,530.05. The S&P 500
.SPX rose 5.76 points, or 0.28 percent, to 2,099.08 and the
Nasdaq Composite .IXIC added 35.86 points, or 0.7 percent, to
5,141.40.
Stocks gained more than 1.0 percent in Europe, with the
pan-European FTSEurofirst 300 index .FTEU3 closed up 1.31
percent at 1,601.66. MSCI's all-country world stock index
.MIWD00000PUS rose 0.24 percent.
Societe Generale SOGN.PA shares jumped 7.9 percent after
the French bank became the latest major European company to post
forecast-beating earnings, while regional automakers, which fell
in late July on concerns about a slowing China, rallied. The
STOXX Europe index .SXAP of 15 companies rose 2.5 percent.
In debt markets, U.S. Treasuries prices fell, while a
sell-off in European bonds accelerated, after the strong ISM
report.
The benchmark 10-year U.S. Treasury note fell 16/32 in price
to yield 2.2681 percent.
German 10-year yields DE10YT=TWEB , the euro zone's
benchmark, jumped 12 basis points to 0.75 percent.
U.S. crude oil futures slide to 4-1/2 month lows as traders
fretted about a surge in refinery runs and gasoline inventories
as the summer season, which counts for the country's biggest
demand period for motor fuels, neared its end.
September Brent crude oil futures LCOc1 fell 72 cents to
$49.27 a barrel. U.S. crude for September delivery CLc1 gained
68 cents to trade at $45.06 a barrel.
(Editing by Larry King and Meredith Mazzilli; To read Reuters