* 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. ID:nN9N10A00G
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. ID:nZON1YIM00
"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. ECONUS
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 Global Investing Blog click on http://blogs.reuters.com/globalinvesting; for the MacroScope Blog click on http://blogs.reuters.com/macroscope; for Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub)