* European shares rise, led by Italian banks
* Wall Street climbs with support from financials, tech stocks
* Dollar gains after strong ADP jobs data, Italy weighs on euro
* Oil retreats further from 4-year high as Saudi pumps more
By Laila Kearney
NEW YORK, Oct 3 (Reuters) - Stock markets around the world rose and Italian bonds rallied on Wednesday after signs that Rome would cut budget deficits and decrease its debt in the coming years, while new U.S. jobs data supporting a strong U.S. economy boosted the dollar.
U.S. stocks rose at the open, with the Dow Jones Industrial Average opening at a record high, as financial stocks gained from a rebound in European markets. Dow Jones Industrial Average .DJI rose 156.86 points, or 0.59 percent, to 26,930.8, the S&P 500 .SPX gained 12.19 points, or 0.42 percent, to 2,935.62 and the Nasdaq Composite .IXIC added 28.33 points, or 0.35 percent, to 8,027.87.
MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.22 percent.
"Today, so far, has been better-than-expected performance out of Europe," said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee, Wisconsin.
Markets lifted after a report in the Corriere della Serra newspaper - later confirmed to Reuters by a government source - said Italy's deficit would fall to 2.2 percent of gross domestic product in 2020 and to 2 percent in 2021 from the 2.4 percent earlier outlined. That relieves some concerns that Italian budget deficits could deepen its debt problems and stoke conflict with the European Union 10-year borrowing costs eased off 4-1/2-year highs IT10YT=RR , after jumping 50 basis points since budget details emerged last Thursday. Two-year yields fell 10 bps. IT2YT=RR
The improved mood towards Italy also reduced the premium investors demand for holding Italian risk relative to that of safer Germany to around 290 bps, down from a five-year high over 300 bps on Tuesday IT10DE10=RR , and sapped demand for safe-haven assets such as German bonds and Swiss franc.
The pan-European equity index rose 0.6 percent .STOXX , while the Milan bourse jumped more than one percent .FTMIB . The moves were led by an initial 3.1 percent bounce in Italian banks .FTIT8300 . The banks' large government debt holdings make them particularly vulnerable to bond selloffs and have pressured Italian stock markets for months.
The U.S. dollar gained after the release of ADP National Employment Report on Wednesday that showed private employers added 230,000 jobs in September, the most since February. That was more than economists' expectations of 185,000 jobs. stronger-than-expected data comes ahead of the more comprehensive non-farm payrolls data on Friday.
The dollar index .DXY rose 0.06 percent.
Lingering concerns about Italy's budget negotiations continued to weigh on the euro EUR= , which was down 0.07 percent to $1.1538. The single currency hit a six-week trough of $1.1506 on Tuesday after an Italian lawmaker said his country might be better off with its "own currency."
Uncertainty about Italy has continued to weigh on broader market sentiment, as have worries that a U.S.-China tariff dispute will escalate once Chinese markets reopen after a week-long holiday.
While U.S. President Donald Trump agreed a new trade pact with Mexico and Canada, a disputed clause in the trilateral agreement, forbidding similar deals with "non-market" countries, was seen as raising risks for Sino-U.S. talks. index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.2 percent and Japan's Nikkei .N225 closed 0.7 percent lower.
China's financial markets will resume trade on Oct. 8, the day Trump and Chinese President Xi Jinping are due to attend G-20 meetings, meaning news could emerge on the trade front.
In oil, prices retreated from session peaks near a four-year high as top exporter Saudi Arabia said it increased output and after Reuters reported that Russia and Saudi Arabia had struck a deal to pump more. O/R
U.S. crude CLcv1 rose 0.17 percent to $75.36 per barrel and Brent LCOcv1 was last at $85.20, up 0.47 percent on the day.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Asia-Pacific valuations
https://tmsnrt.rs/2Dr2BQA Italy's 2-year bond yield: absolute change
https://reut.rs/2QqI0NN Italian stocks lag Europe
https://reut.rs/2QpHsbe
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>