* Upbeat data lures investors back to U.S. stocks; dollar steadies
* Brazilian benchmark stock index tumbles
* Yield rise as stocks gain, though political concerns remain (Updates to U.S. market close)
By Saqib Iqbal Ahmed
NEW YORK, May 18 (Reuters) - Wall Street rebounded on Thursday from its biggest sell-off in more than eight months, helped by strong U.S. economic data, but uncertainty over U.S. President Donald Trump's agenda kept an index of global equity markets near a three-week low.
The U.S. dollar reversed early losses against a basket of major currencies after stronger-than-expected U.S. economic data put the focus back on a widely anticipated increase in interest rates by the Federal Reserve. reports that U.S. President Donald Trump had tried to intervene in an investigation of alleged Russian meddling in last year's U.S. presidential election, and that his aides had numerous undisclosed contacts with Russian officials, kept markets concerned over his ability to implement his economic agenda. to market jitters across the Americas, Brazilian stocks triggered a 30-minute halt to trading after the benchmark Bovespa index fell 10 percent following a report that President Michel Temer gave his blessing to an attempt to pay to silence a potential witness in the country's biggest-ever graft probe. iShares MSCI Brazil ETF EWZ.P tumbled 16 percent.
MSCI's all-country world equity index .MIWD00000PUS was down 0.31 percent after dipping to its lowest since April 25 earlier in the day.
The index found some support on Wall Street. U.S. stocks recovered ground after a near 2 percent sell-off on Wednesday for the S&P 500, as upbeat economic data emboldened investors to return to the market. could be just shaking off the jitters here. Yesterday, investors were really worried," said Janna Sampson, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.
Investors were likely relieved, she said, by Wednesday night's appointment of former FBI chief Robert Mueller to investigate alleged Russian interference in the election and possible collusion between Trump's campaign and Moscow.
"Whatever the (investigation) result, people feel they might have confidence it's an accurate, unbiased result," she said.
Earlier in the day, the Philadelphia Federal Reserve said its business activity index rose in May after declining for two months. Weekly unemployment data also pointed to strength in the labor market. Dow Jones Industrial Average .DJI rose 56.09 points, or 0.27 percent, to end at 20,663.02, the S&P 500 .SPX gained 8.69 points, or 0.37 percent, to finish at 2,365.72 and the Nasdaq Composite .IXIC added 43.89 points, or 0.73 percent, to close at 6,055.13.
The pan-European FTSEurofirst 300 index .FTEU3 closed down 0.89 percent at 7,436.42, ending off lows. Treasury yields rose from one-month lows as stocks recovered from Wednesday's drop, reducing demand for safe-haven bonds. 10-year note US10YT=RR was down 4/32 in price to yield 2.229 percent, up from 2.216 percent late on Wednesday.
Spot gold XAU= dropped 1 percent to $1,247.78 an ounce.
The U.S. dollar reversed early losses against a basket of major currencies, getting a boost from the better-than-expected U.S. data. readings on jobless claims and the Philly Fed index back expectations for faster (second-quarter) growth and a Fed rate hike next month," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
The dollar index .DXY was up 0.27 percent, with the euro EUR= down 0.45 percent to $1.1108. prices settled higher as key producing countries suggested they would extend supply cuts to reduce an ongoing global crude glut. Brent crude futures LCOc1 ended the session 30 cents higher at $52.51 a barrel while U.S. crude futures CLc1 settled up 28 cents at $49.35.
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