GLOBAL MARKETS-Data lifts US stocks, but economy fears linger

* Rise in U.S. consumer confidence supports stocks

* Lingering fears of faltering economic recovery weigh

* Oil falls 2 pct a barrel to $73.14

* Gold at two-month high, yen near 15-year high (Updates with European markets' close)

By Walter Brandimarte

NEW YORK, Aug 31 (Reuters) - U.S. stocks gained modestly on Tuesday after a rise in U.S. consumer confidence offered some hope to investors, but lingering fears of a double-dip recession weighed on oil prices and the dollar.

European stocks erased losses but still recorded their largest monthly decline in August since May. Continued demand for safe-haven assets pushed the yen to a near 15-year peak and gold prices to a two-month high.

While U.S. stocks rose modestly, investors worried about the outlook after recent disappointing economic reports.

"Markets responded to the better-than-expected U.S. consumer confidence, but the markets have not made their mind up about the recovery," said Mike Lenhoff, chief strategist at Brewin Dolphin. "There are still worries about a double-dip recession."

Tuesday's data showed U.S. consumer confidence rose above expectations in August while other data reported a larger-than-forecast increase in prices of U.S. single-family homes in June also helped. For details, see [ID:nN31237504].

"Consumer confidence is the second positive surprise we've had today. Does that mean we've hit the peak of bearishness yet? If not, we're probably close," said Uri Landesman, president of Platinum Partners in New York.

"I think these two data points, combined, will prevent what would've been a pretty bad day."

See graphs on:

Consumer confidence: http://link.reuters.com/pex48n

Yen versus dollar: http://link.reuters.com/byv86n

Among the weaker economic reports was one on Tuesday that business activity in the U.S. Midwest grew less than expected in August. [ID:nN31183001]

The Dow Jones industrial average <.DJI> rose 42.61 points, or 0.43 percent, to 10,052.34, while the Standard & Poor's 500 Index <.SPX> climbed 3.79 points, or 0.36 percent, to 1,052.71. The Nasdaq Composite Index <.IXIC> was up 3.68 points, or 0.17 percent, at 2,123.65.

The MSCI All-Country World equity index <.MIWD00000PUS> trimmed losses but remained 0.16 percent lower.

The FTSEurofirst 300 index <.FTEU3> of top European shares eked out a gain of 0.08 percent after falling as much as 1.3 percent on Tuesday. It fell around 2 percent for the month.

YEN NEARS 15-YEAR HIGH

The yen on Tuesday neared a 15-year high against the dollar and was headed for its fourth monthly rise as the U.S. economic concerns boosted the safe-haven appeal of the Japanese currency.

The strengthening of the yen came despite Japan's decision to expand cheap loans to banks, a symbolic monetary easing move seen as a sign that authorities may act further to stop the currency appreciation.

"The policy action by the BoJ isn't going to change the market's mood. It would probably take intervention to shake things up a bit," said Vassili Serebriakov, currency strategist at Wells Fargo in New York.

Around midday New York trade, the dollar was down 0.58 percent against the yen at 84.11. It had earlier fallen to 84.06, according to Reuters data, not far from its 15-year low of 83.58 set on electronic trading platform EBS last week.

The euro was up 0.32 percent at $1.2703 .

The dollar was also down 0.24 percent against a basket of major currencies measured by the U.S. Dollar Index <.DXY>.

U.S. Treasury prices gave back some of their earlier gains but remained higher in a sign that investors are skeptical of the U.S. economic outlook.

The benchmark 10-year U.S. Treasury note was up 13/32 in price, with the yield at 2.4842 percent. The 30-year bond rose 22/32, with the yield at 3.544 percent.

U.S. crude oil prices fell $1.56, or 2.09 percent, to $73.14 per barrel, while spot gold prices $10.35, or 0.84 percent, to $1,246.60, their highest since late June. (Additional reporting by Chuck Mikolajczak, Chris Reese, and Wanfeng Zhou; Editing by Kenneth Barry)