GLOBAL MARKETS-Stocks at multi-month highs; euro surges

* Global stocks hit 2-1/2 month highs on investor optimism

* US manufacturing data, European bank results lift stocks

* Euro at three-month high vs dollar

* Oil above $81 a barrel on dollar weakness

By Manuela Badawy

NEW YORK, Aug 2 (Reuters) - Global stocks surged to a 2-1/2 month high and the euro hit a three-month high on Monday as growth in the U.S. manufacturing sector topped expectations and European bank earnings boosted optimism.

The euro neared $1.32 for the first time since early May, with the single currency picking up steam after it broke a key technical level.

Earning from BNP Paribas and HSBC , two of Europe's top three banks, topped forecasts as their bad debts fell sharply, adding to positive sentiment after the release last month of a report on the health of European banks.

The U.S. manufacturing sector grew in July for a 12th straight month, and growth slightly topped expectations, according to an industry report. [ID:nN02170396]

Crude oil prices rose above $81 a barrel for the first time since early May, boosted by the weakness in the U.S. dollar, the upbeat data as well and an increased possibility of a tropical depression forming in the Atlantic.

Gold prices fell and government bonds were pressured as the improved investor sentiment dented the bid for safe havens.

"What we've seen over the last few weeks has been decent earnings, but economic data has been on the weak side. But today we had good earnings out of Europe, and we actually had strong economic data, and that is piling on to a decent start to the month," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio.

The Dow Jones industrial average <.DJI> closed up 208.51 points, or 1.99 percent, at 10,674.45. The Standard & Poor's 500 Index <.SPX> gained 24.24 points, or 2.20 percent, at 1,125.84. The Nasdaq Composite Index <.IXIC> rose 40.66 points, or 1.80 percent, at 2,295.36.

The strong European bank results lifted U.S. bank stocks. Bank of America Corp closed up 2.8 percent at $14.44, and JPMorgan Chase & Co added 3.4 percent to $41.64.

The rise in crude prices, coupled with BP's attempt to cap for good its Macondo well in the Gulf of Mexico, sent energy shares soaring.

Macondo-linked companies Transocean Ltd and Anadarko Petroleum jumped, with Transocean up 9.7 percent to $50.68, and Anadarko up 8.4 percent to $53.27. The Philadelphia exchange oil services sector index <.OSX> rose 4.5 percent.

The MSCI world equity index <.MIWD00000PUS> rose 2.35 percent, reaching a two-and-a-half month high, while the Thomson Reuters global stock index <.TRXFLDGLPU> gained 2.1 percent as investors built on last month's run-up. Emerging stocks <.MSCIEF> rose 2.1 percent to a three-month high.

The FTSEurofirst 300 index <.FTEU3> surged 2.6 percent to reach a three-month closing high boosted by the strong results from HSBC and BNP Paribas and the U.S. manufacturing data.

The STOXX Europe 600 Banking <.SX7P> index surged 3.9 percent, snapping two days of losses. HSBC and BNP Paribas both jumped 5.3 percent, after the banks trumped earnings forecasts as bad debts fell sharply.

EURO'S MOVE

The euro rose to $1.3176, up 1 percent on the day and its best level against the greenback since early May. Analysts said euro buying gained momentum after the currency broke $1.3125. That was the 38.2 percent retracement of a decline that began last November and ended in June around 1.1876, its lowest level since 2006.

The dollar index, however, hit a three-month low, hurt by worries that the U.S. economic recovery is losing steam.

The index, which measures the greenback's value against a basket of currencies, hit a three-month low of 81.354 <.DXY>, dipping 0.74 percent to 80.934, roughly a 50 percent retracement of its November-to-June rally.

"We're seeing a disconnection as U.S. data stays weak yet risk appetite is strong. Weak U.S. data will translate into risk aversion at some point," said Tom Levinson, currency strategist at ING.

U.S. Treasury debt prices fell, with the 30-year bond shedding a full point in price after the stronger-than-expected growth in the manufacturing sector in July.

The 30-year Treasury bond was trading one point lower in price to yield 4.06 percent, up from 3.99 percent late on Friday, while benchmark 10-year notes were 16/32 lower to yield 2.96 percent from 2.91 percent. The 2-year U.S. Treasury note was down 1/32, with the yield at 0.56 percent.

U.S. crude oil rose $2.49, or 3.15 percent, to $81.44 per barrel. Spot gold prices shed gains despite broad metals and commodity rises amid economic optimism, as technical selling put a damper on bullion's initial strength. Gold rose 70 cents, or 0.06 percent to $1181.10. (Additional reporting by Leah Schnurr and Steven Johnson in New York, Neal Armstrong in London; Editing by Leslie Adler)