* U.S. housing starts rise, jobless claims fall more than expected
* Cisco, Walmart (NYSE:WMT) shares rise after earnings, buoy Wall St
* Germany's DAX jumps, leads European markets higher
* Trade in focus after latest U.S. sanctions on Huawei
* Oil prices rise as Middle East conflict intensifies (Updates with afternoon U.S. trading)
By Lewis Krauskopf
NEW YORK, May 16 (Reuters) - World stock markets were buoyed by deal-making news and solid earnings from Dow components Cisco and Walmart on Thursday while strong economic data pushed U.S. bond yields higher even as investors struggled to make sense of the latest developments in global trade relations.
A spike in U.S.-China tensions over import tariffs has convulsed markets recently as investors seek to parse statements from government leaders to gauge the direction of negotiations.
News that U.S. President Donald Trump is expected to delay auto tariffs appeared to improve the trade tone on Wednesday, but later in the day the Trump administration hit Chinese telecoms giant Huawei with severe sanctions. market is really having a hard time pricing in this trade war," said Mark Hackett, chief of investment research at Nationwide. "There was a belief earlier in the week that it was going to be catastrophic and we have gained back all of that decline. In my opinion, it is probably a little too optimistic to declare victory."
On Wall Street, the Dow Jones Industrial Average .DJI rose 234.92 points, or 0.92%, to 25,882.94, the S&P 500 .SPX gained 30.83 points, or 1.08%, to 2,881.79 and the Nasdaq Composite .IXIC added 85.78 points, or 1.1%, to 7,907.92.
Shares of Cisco Systems CSCO.O and Walmart WMT.N both gave boosts to the S&P 500 and the Dow after their respective earnings reports. Cisco shares rose 7.0% and Walmart rose 2.2%. Philadelphia semiconductor index .SOX fell 1.8% following the Huawei news.
The pan-European STOXX 600 index .STOXX rose 1.27%. DAX .GDAXI jumped 1.7%, fueled by news of corporate deals. Thyssenkrupp TKAG.DE shares rose 9.4% after Reuters reported Finnish company Kone KNEBV.HE is assessing a bid for the German conglomerate's elevators division. gauge of stocks across the globe .MIWD00000PUS gained 0.72%.
U.S. homebuilding increased more than expected in April and activity in the prior month was stronger than initially thought. In a separate report, the number of Americans filing applications for unemployment benefits fell more than expected last week. Treasury yields rose following the strong economic data. 10-year notes US10YT=RR last fell 6/32 in price to yield 2.398%, from 2.379% late on Wednesday.
The U.S. dollar rose against a basket of currencies as investors focused on trade war tensions, while the euro was hurt by concerns about next week's European parliamentary elections. dollar index .DXY rose 0.23%, with the euro EUR= down 0.21% to $1.1177.
"The risk is that we get more populist comments, such as from the Italian deputy PM," said Credit Agricole (PA:CAGR) FX strategist Manuel Olivieri. "Italy remains one of the factors keeping euro downside risks high."
Oil prices jumped as tensions in the Middle East grew, with a Saudi-led coalition launching air strikes in retaliation for recent attacks on its oil infrastructure. crude CLcv1 rose 1.37% to $62.87 per barrel and Brent LCOcv1 was last at $72.88, up 1.55% on the day.
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