* S&P, Dow stay on winning way, hits record peaks
* Upbeat tech earnings propel European shares higher
* Dollar index rises on encouraging data, rate-hike bets
* Oil prices hit 2-month lows before U.S. inventory data (Update market action, changes dateline, previous LONDON)
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 fell to a two-month low before U.S. data that may signal whether a supply glut in the top consuming country was easing.
"For the rally to sustain we are going to need to see continued improvement in the earnings and economic activity," said Peter Cardillo, chief market economist at First Standard Financial in New York.
Shortly after their open, the Dow Jones industrial average .DJI was up 14.72 points, or 0.08 percent, to 18,573.73, the S&P 500 .SPX was up 3.23 points, or 0.15 percent, to 2,167.01 and the Nasdaq Composite .IXIC was 27.29 points, or 0.54 percent higher, at 5,063.66. 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 up 0.58 percent to 1,340 points. MSCI world equity index .MIWD00000PUS , which tracks shares in 45 nations, rose 0.65 points or 0.16 percent, to 411.48.
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.
Benchmark U.S. 10-year Treasury yield US10YT=RR was up 3 basis points at 1.59 percent, while 10-year German Bund yield DE10YT=RR edged up 1 basis point at -0.17 percent.
In currency trading, the dollar rose to its strongest levels in four months against a basket of currencies as lofty stock prices and the recent string of encouraging economic data revived wagers the Fed would raise interest rates later this year. dollar index .DXY was up 0.1 percent at 97.133.
A stronger greenback partly weighed down oil prices with U.S. crude futures falling a two-month low ahead of domestic data on energy inventories at 10:30 a.m. (1430 GMT). crude LCOc1 was last down $0.44, or down 0.94 percent, at $46.22 a barrel. U.S. crude CLc1 was last down $0.68, or down 1.52 percent, at $43.97 per barrel. declined to a three-week low on rising equity prices and a stronger dollar. It XAU= fell $15.15 or 1.14 percent, to $1,316.58 an ounce. GRAPHIC-Asset performance in 2016
http://reut.rs/1WAiOSC GRAPHIC-Currency performance
http://link.reuters.com/tak27s
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