GLOBAL MARKETS-Stocks rally on virus vaccine hopes, dollar gains

(Adds U.S. market open, byline, dateline; previous LONDON)

* Nasdaq hits new high as stocks rally for third day

* Media reports about a virus vaccine boost sentiment

* U.S., European data also buoy investors

By Herbert Lash

NEW YORK, Feb 5 (Reuters) - The dollar gained and a gauge of

global equity markets surged for a third day as expectations of

more central bank stimulus and media reports that suggest

scientists are closing in on a vaccine for the deadly

coronavirus boosted sentiment.

U.S Treasury yields rose as traders welcomed early reports

that a Chinese university team found a drug to treat those

infected with the virus while UK researchers said they made a

"significant breakthrough" in finding a vaccine. The acceleration of euro zone business activity in January,

indicating the worst may be over for the bloc's economy, while

U.S. data showed an economy that is growing, albeit moderately,

also boosted risk appetite and doused a bid for safe havens.

MSCI's gauge of stocks across the globe .MIWD00000PUS

gained 0.72%, about 1.3% from a record high set almost three

weeks ago. But the Nasdaq on Wall Street set a new high and the

benchmark S&P 500 was about four-tenths of 1% from a fresh

record.

Yousef Abbasi, global market strategist at INTL FCStone

Financial Inc in New York said stimulus efforts by China's

central bank and greater U.S. liquidity because of Federal

Reserve operations in the repo market have boosted risk assets.

"I have a tough time justifying why this market is trading

at 19 times earnings and why we have managed to snap back from

any sell-off since October," Abbasi said, regarding U.S. stocks.

"But at this point, looking at this market, it almost feels

like any hiccup further emboldens the global central bank put,"

he said, referring to central bank activity that increases

market liquidity and encourages risk taking.

The Dow Jones Industrial Average .DJI rose 311.47 points,

or 1.08%, to 29,119.1. The S&P 500 .SPX gained 26.62 points,

or 0.81%, to 3,324.21 and the Nasdaq Composite .IXIC added

24.13 points, or 0.25%, to 9,492.10. In Europe, the pan-regional STOXX 600 index .STOXX rose

1.19% and MSCI's gauge of stocks across the globe

.MIWD00000PUS gained 0.72%, while emerging market stocks rose

0.55%.

IHS Markit's final euro zone composite Purchasing Managers'

Index (PMI), seen as a good indicator of economic health, rose

to a five-month high of 51.3 in January from 50.9 the previous

month.

U.S. data also was encouraging.

The Institute for Supply Management (ISM) said its

non-manufacturing activity index increased to a reading of

55.5 in January, the highest level since August. Data for

December was revised slightly down to show the index at a

reading of 54.9 instead of the previously reported 55.0.

Readings above 50 indicate economic expansion.

The dollar gained against the safe-haven Japanese yen and

Swiss franc, as risk appetite rose on reports of a possible

treatment for the coronavirus.

The U.S. currency also benefited from a private-sector

payrolls report for January that surpassed market expectations,

suggesting the world's largest economy was on a stable growth

path and interest rate cuts were off the table for now.

U.S. private-sector payrolls increased by 291,000 in

January, according to the ADP National Employment Report, far

above expectations of an increase of 156,000 jobs. January's job

gains were the largest since May 2015. The dollar index .DXY rose 0.29%, with the euro EUR=

down 0.38% to $1.1. The yen JPM= weakened 0.15% versus the

greenback at 109.71 per dollar. Overnight in Asia, stringent containment measures, along

with the billions of dollars Chinese authorities have pumped

into the economy, boosted mainland China indexes more than 1%

.SSEC .CSI300 . The bourses have clawed back

half of the $700 billion in market capitalization that was wiped

out during Monday's almost 8% rout.

Oil prices jumped 4% after media reports highlighted a

potential vaccine, though the World Health Organization played

down the news, saying there are "no known effective

therapeutics" against the virus. Brent crude oil futures LCOc1 rose $2.07 to $56.03 a

barrel. U.S. West Texas Intermediate (WTI) crude CLc1 gained

$1.72 to $51.33.

Benchmark 10-year notes US10YT=RR fell 11/32 in price to

yield 1.637%.