* S&P, Dow stay on winning track, hit fresh record peaks
* Upbeat tech earnings propel European shares higher
* Dollar index rises on encouraging data, rate-hike bets
* Oil recovers from 2-month lows on U.S. inventory draw (Updates market action, adds quote)
By Richard Leong
NEW YORK, July 20 (Reuters) - Upbeat company earnings lifted U.S. and European stock prices on Wednesday, with the Dow and Standard & Poor's 500 setting record highs, while the dollar reached a four-month peak on bets the U.S. Federal Reserve may raise interest rates by year-end.
The impressive run in major equity markets around the globe led investors to reduce their safe-haven positions in U.S. and German government debt, sending their yields higher.
Oil prices recovered from a two-month low in reaction to U.S. data that showed a further drawdown in crude inventories, reducing worries about a domestic supply glut.
"The market has been rallying on the expectation of good earnings with some companies even providing decent forecasts," said Thomas Wilson, managing director of wealth advisory at Brinker Capital in Berwyn, Pennsylvania.
In late U.S. trading, The Dow Jones industrial average .DJI was up 44.2 points, or 0.24 percent, at 18,603.21, the S&P 500 .SPX was up 9.25 points, or 0.43 percent, at 2,173.03 and the Nasdaq Composite .IXIC was up 53.92 points, or 1.07 percent, at 5,090.29. MSFT.O and Morgan Stanley (NYSE:MS) MS.N were the latest U.S. companies whose quarterly results topped analysts estimates. the Atlantic, SAP SAPG.DE , Europe's largest software group, and ASML Holding ASML.AS , a supplier to semiconductor makers, reported quarterly results that beat forecasts. helped propel Europe's broad FTSEurofirst 300 index .FTEU3 to close up 1 percent at 1,345.11 points. MSCI world equity index .MIWD00000PUS , which tracks shares in 45 nations, rose 1.92 points or 0.47 percent, to 412.75.
Earlier, Japan's Nikkei .N225 broke a seven-day winning streak, falling 0.3 percent. most global stock markets post gains, investors scaled back their holdings of low-yielding government bonds, with U.S. and German yields near their highest levels since Britain's vote to leave the European Union on June 23.
The benchmark U.S. 10-year Treasury yield US10YT=RR was up 2 basis points at 1.58 percent, while 10-year German Bund yield DE10YT=RR moved up 2 basis points at -0.01 percent.
In currency trading, the dollar rose to its strongest levels in four months against a basket of currencies as lofty stock prices and encouraging economic data revived wagers the Fed would raise interest rates later this year. dollar index .DXY was up 0.1 percent at 97.202.
Oil prices rose as much as 1 percent, lifting U.S. crude from two-month lows, after the U.S. government reported a ninth straight week of crude inventory draws.
Brent crude LCOc1 settled up 51 cents or 1.1 percent, at $47.17 per barrel. U.S. crude CLc1 settled up 29 cents or 0.65 percent at $44.94 a barrel. declined to a three-week low on rising equity prices and a stronger dollar. It XAU= fell $14.83 or 1.11 percent, to $1,316.90 an ounce. GRAPHIC-Asset performance in 2016
http://reut.rs/1WAiOSC GRAPHIC-Currency performance
http://link.reuters.com/tak27s
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>