(Updates prices to midday U.S. trading)
*
U.S. jobless claims decline, producer prices barely gain
*
U.S. stocks up again, MSCI All Country index hits new high
*
Dollar down as euro gains
*
Treasury yields fall further
*
Brent crude hovers around $80 a barrel
By Lawrence Delevingne and Huw Jones
July 13 (Reuters) - U.S. stocks rose again and global stock markets hit new highs for 2023 on Thursday, while the dollar and Treasury yields continued to slide, amid hopes slowing U.S. inflation will persuade the Fed to pause rate hikes after this month.
Wall Street's main stock indexes built on Wednesday's sharp gains after data showed that consumer prices rose modestly in June, registering the smallest annual increase in more than two years.
Investors also digested fresh data on Thursday showing that U.S. producer prices barely rose in June, U.S. jobless claims unexpectedly declined, and Chinese exports dropped.
The Dow Jones Industrial Average rose 0.11% to 34,385.57, the S&P 500 gained 0.51% to 4,494.79, and the Nasdaq Composite added about 1% to hit 14,054.36.
Bets that the Federal Reserve could soon end its monetary tightening campaign also sent the dollar to its lowest since April 2022 and pushed the yield on two-year U.S. Treasury notes to near a four-week low.
Interest rate futures showed markets have fully priced in another rate hike from the Federal Open Market Committee (FOMC) later this month, but expectations of any further increases have faded.
The MSCI All Country stock index was up 0.9%, hitting a new high for the year. It is up 14.7% so far in 2023, though it has still not wiped out all of the near 20% loss in 2022.
Stocks and bonds in Asia rallied in response to the U.S. inflation news, while in Europe the STOXX index added 0.65% to Wednesday's gains, bringing its advance for the year to around 8.7%.
Market strategists at Citigroup said in a note on Thursday that slower job growth and softer-than-expected core consumer prices "finally lend some support to the Fed’s preferred narrative that supply and demand are coming into balance, allowing inflation to cool."
"We’ve been expecting a subsequent hike in September, but recent data raise the probability it’s delayed to November," they added.
DISMAL CHINA DATA
Investors in Asia shook off dismal China trade data, which showed both exports and imports contracted at a worse-than-expected pace last month, betting that the latest bad news will trigger more stimulus measures.
MSCI's broadest index of Asia-Pacific shares outside Japan surged about 2%, bolstered by a 2.6% jump in Hong Kong's Hang Seng index and a 1.6% gain in Australia's resources-heavy shares. Japan's Nikkei rose 1.5%.
The International Monetary Fund said on Thursday that first quarter global growth slightly outpaced projections in its April forecasts, but data since then has shown a mixed picture, with "pockets of resilience" alongside signs of slowing momentum.
BOND RELIEF
Bond yields were lower after a rout last week sent them sharply higher. The 10-year Treasury yield eased to 3.801%, down 6.1 basis points, having dived from a seven-month top of 4.0940% on Friday.
Rate-sensitive two-year yields slipped to 4.654%, down 8.9 basis points.
Oil prices traded near the highest in two months on a soft U.S. dollar. Brent crude futures was up slightly at $80.80 per barrel and U.S. West Texas Intermediate crude futures also ticked up to $76.36.
Gold prices were up 0.2% at $1,960 per ounce.
To read Reuters Markets and Finance news, click on https://www.reuters.com/finance/markets
(Reporting by Lawrence Delevingne in Boston and Huw Jones in London; Additional reporting by Stella Qiu in Sydney; Editing by Chizu Nomiyama and Andrew Heavens)
