Stocks hover above bear territory, German Ifo surprises



* European bourses less hit than Wall Street

* Economic updates from Davos eyed

* German IFO business index shows resilience

* ECB says could see interest rate "lift-off" in July

By Huw Jones

LONDON, May 23 (Reuters) - Stocks hovered just above bear market territory on Monday as economic fallout from the war in Ukraine and persistently high inflation capped gains in equity benchmarks.

Oil rose, gold extended its recent gains, but the dollar slipped as investors cut their bets on further advances in the U.S. currency from rising interest rates.

Investors in Europe drew comfort from the S&P 500 index .SPX on Wall Street ending Friday just clear of bear market territory, meaning down 20% from its Jan. 3 record high close.

The MSCI all country index .MIWD00000PUS was up 0.16%, still down nearly 18% from its record high in January.

The S&P index suffered its seventh successive weekly fall for the first time since the dotcom bubble burst in 2001, Deutsche Bank said in a note.

"For what it's worth the Dow saw the first successive 8th weekly decline since 1923 which really brings home the state of the current sell-off," Deutsche Bank said.

S&P 500 futures ESc1 were up 0.7%, indicating a steady open in New York, though analysts sounded a note of caution.

"I don't think we have reached rock bottom yet, it's a bear market rally. The market is still pretty concerned about sticky inflation," said Michael Hewson, chief markets analyst at CMC Markets.

The STOXX index .STOXX of 600 European companies rose 0.7% to 435.7 points, down about 13% from its January record high.

U.S. stock markets have been harder hit than Europe because they were more overvalued, and the U.S. Federal Reserve is being more aggressive in prioritising the fight against inflation over other factors, Hewson said.

"We haven't had that extent of hawkishness from the Bank of England or the European Central Bank, and I think that's why the losses in Europe have been slightly more modest," Hewson said.

ECB President Christine Lagarde said on Monday there could be an interest rate "lift-off" at its meeting in July.

European resilience was highlighted by Germany's Ifo business climate index for March unexpectedly rising to 93 in May, defying market expectations of a fall to 91.4.

"The gradual return of optimism continues but only if the focus is limited to the very short run," ING bank said.

The German DAX blue chip index .GDAXI was up 1%.

The World Economic Forum holds its first in-person meeting in two years in Davos, Switzerland over the coming four days, with central bankers and the International Monetary Fund participating in panels on the outlook for economies and inflation.

PEAK DOLLAR?

The dollar index =USD , which tracks the U.S. unit against a basket of currencies of other major trading partners, was down 0.3% at 102.60. The index rose by about 16% to a two-decade high over the 12 months to mid-May.

"The dollar may be carving out a peak, given Europe's resilience to the energy shock and potential easing of lockdowns in China," said Commonwealth Bank of Australia strategist Joe Capurso.

The benchmark 10-year Treasury yield US10YT=RR rose to 2.8045% from its U.S. close of 2.787% on Friday. Euro zone government bond yields also edged higher.

The two-year yield US2YT=RR , which rises with traders' expectations of higher Fed fund rates, rose to 2.6037%.

Asian stocks fell as investors worried inflation and rising interest rates would hamper the global economy's performance.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was slightly weaker.

U.S. crude CLc1 gained 1% to $111.43 a barrel as the peak U.S. holiday season driving looms. Brent crude LCOc1 rose 1.15% to $113.85 per barrel.

The concerns over global economic growth have prompted renewed support for gold.

"Gold prices saw the first weekly gain since mid-April as safe-haven demand was boosted by concerns over economic growth amid high inflation," ANZ analysts said in a research note on Monday. "A weaker U.S. dollar has also boosted investor appetite."

Spot gold XAU= was 0.6% higher at $1,857.8 per ounce.



World FX rates YTD Link
Global asset performance Link
Asian stock markets Link
S&P 500 bear markets Link



Editing by Sam Holmes and Emelia Sithole-Matarise


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