GLOBAL MARKETS-US dollar, stocks rise as recovery hopes lift

* Dollar rallies broadly after stronger U.S. consumer data

* Oil slips to near $70 a barrel, a 2-month low, on dollar

* U.S. stocks overcome dollar carry worries to post gains

* Bonds fall on improved prospects for economic recovery (Updates with close of U.S. markets)

By Herbert Lash

NEW YORK, Dec 11 (Reuters) - A U.S. dollar rally on Friday pulled down oil prices while Wall Street stocks mostly moved higher after a strong batch of economic reports boosted optimism that the American economy is on the path to recovery.

The dollar surged to a two-month high against the euro after data showed U.S. consumers stepped up their spending in November and grew more optimistic this month. The data lifted hopes a sustainable recovery was starting to unfold. For details, see: [ID:nN11143194] [ID:nN11254372]

The euro at one point fell to $1.4587 , according to Reuters data, the lowest since early October.

U.S. stocks pared gains at one point on concerns the dollar's strength will undermine shares of large-cap technology companies. The Nasdaq fell as much as 0.5 percent before recovering and closing down just shy of break-even.

Oil fell for the eighth consecutive session, edging below $70 a barrel, as the dollar pressured prices and outweighed solid U.S. and Chinese economic data. [ID:nNSP395010]

The stronger dollar also sent bullion investors racing to cut positions and squashed gold prices to a four-week low of $1,109.10 an ounce. Worries over Spanish and Greek sovereign debt helped boost the safe-haven appeal of the dollar and diminished gold's allure as an inflation hedge.

Ultimately, stocks gained because of the economic reports. Shares of Alcoa Inc surged 8.2 percent and were the second-biggest contributor to the Dow after aluminum prices rose nearly 4.0 percent to their highest since October 2008.

"Better than expected retail sales and consumer sentiment is what a lot of people are pointing to as the turnaround," said Christian Cooper, a rates strategist at RBC Capital Markets in New York.

Rick Lake, portfolio manager of the Aston/Lake Partners LASSO Alternatives Fund in Greenwich, Connecticut, said that "today is a repeat of prior days, with economic data showing recession is bottoming out and recovery is here."

The Dow Jones industrial average <.DJI> closed up 65.67 points, or 0.63 percent, at 10,471.50. The Standard & Poor's 500 Index <.SPX> rose 4.06 points, or 0.37 percent, at 1,106.41. The Nasdaq Composite Index <.IXIC> slipped 0.55 points, or 0.03 percent, at 2,190.31.

U.S. debt prices fell after three days of underwhelming Treasury auctions and the spate of economic data that lifted prospects for a sustained economic recovery. [ID:nN11148810]

Yields, which move inversely to prices, broke through technically significant barriers, spurring further selling.

The benchmark 10-year U.S. Treasury note was down 12/32 in price to yield 3.54 percent.

Oil fell.

U.S. crude for January delivery fell 67 cents to settle at $69.87, matching an eight-day losing streak last seen in October 2003. Prices slid nearly 11 percent over the span.

Brent crude futures rose 2 cents to settle at $71.88 after five straight days of losses.

U.S. February gold futures settled down $6.30 at $1,119.90 an ounce on the COMEX division of the NYMEX.

The dollar was up against a basket of major currencies, with the U.S. Dollar Index <.DXY> up 0.66 percent at 76.546.

The euro was down 0.77 percent at $1.462. against the yen, the dollar was up 1.04 percent at 89.10.

A slew of data earlier the day showed China is on a brisk path to recovery, buoyed Asian equity and commodity markets.

The MSCI index of Asia Pacific stocks outside Japan rose 0.5 percent <.MIAPJ0000PUS> and Japan's Nikkei share average <.N225> rose almost 2.5 percent. (Reporting by Angela Moon, Edward McAllister, Steven C. Johnson, Emily Flitter and Frank Tang in New York; Kirsten Donovan, Jan Harvey, Michael Taylor in London; writing by Herbert Lash)