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Graphic: World FX rates http://tmsnrt.rs/2egbfVh

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Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn

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Currency markets edgy after suspected Japanese yen

intervention

(Updated prices at 11:10 a.m ET/ 1510 GMT)

By Sinéad Carew and Naomi Rovnick

NEW YORK/LONDON, July 12 (Reuters) - The dollar fell

sharply against the yen for the second straight day, raising

questions as to whether Japan was intervening while a global

equities index rose on Friday as investors eyed U.S.

interest-rate cuts and the U.S. earnings season kicked off.

The benchmark 10-year U.S. Treasury yields gained modestly

after the producer price index (PPI) rose more than expected in

June. Still, investors focused on Thursday's data, which had

fueled bets on Federal Reserve interest-rate cuts in September.

The S&P 500 bank index was underperforming the

broader market, down more than 2%, as the first set of

second-quarter earnings and financial guidance from some of the

biggest U.S. banks failed to impress.

"Earnings season hasn't gotten off to a great start but

we're still very early. We're seeing some companies talking

about their ability to control expenses. We're looking for more

clarity as the season goes on," said Celia Hoopes, portfolio

manager at Brandywine Group in Philadelphia.

But investors appeared less worried about Friday's

hotter-than-expected PPI numbers after Thursday's

cooler-than-expected consumer price index (CPI) had boosted

confidence that inflation was coming under control.

"The market's shaking off the higher PPI print and continues

to look for the Fed rate cut in September as a result of the

lower CPI print from Thursday," said Hoopes.

On Wall Street, at 11:10 a.m. the Dow Jones Industrial

Average rose 300.60 points, or 0.76%, to 40,054.35, the

S&P 500 gained 51.23 points, or 0.92%, to 5,635.77 and

the Nasdaq Composite gained 212.90 points, or 1.16%, to

18,496.31.

MSCI's gauge of stocks across the globe rose

6.40 points, or 0.78%, to 830.67, hitting a record intraday

high. Europe's Stoxx share index rose 0.95%, hitting

its highest level since June 7 and eyeing a second consecutive

week of gains and its biggest weekly gain since early May.

In currencies the yen jumped against the dollar to an almost

four-week high, putting traders on alert for signs of fresh

intervention by Japan, which likely stepped in Thursday to prop

up a currency still close to its lowest in 38 years.

While Tokyo had not confirmed any move on Thursday to prop

up the flailing yen, the Bank of Japan's daily operations report

on Friday suggested between 3.37-3.57 trillion yen ($21.18-22

billion) had been spent on strengthening the currency.

The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

fell 0.28% to 104.05, with the euro up 0.39% at $1.0907.

Against the Japanese yen, the dollar weakened 0.65%

to 157.76.

Meanwhile, sterling strengthened 0.59% at $1.2987,

hitting its highest level in almost a year and after comments

from Bank of England policymakers earlier this week and

better-than-forecast GDP data hurt bets for an August rate cut.

In Treasuries, yields advanced after the inflation data. The

yield on benchmark U.S. 10-year notes rose 1.1 basis

points to 4.204%, from 4.193% late on Thursday and the 30-year

bond yield rose 1.6 basis points to 4.4199%.

But the two-year note yield, which typically

moves in step with interest-rate expectations, fell 2.4 basis

points to 4.483%, from 4.507% late on Thursday.

Global oil prices rose, still reflecting optimism about U.S.

rate cuts. U.S. crude gained 0.61% to $83.12 a barrel and

Brent rose to $85.72 per barrel, up 0.37%.

Gold prices retreated as investors took profits after a

strong rally in the previous session, although bullion was still

on track for its third straight weekly rise on increased bets

around U.S. interest rate cuts.

Spot gold lost 0.13% to $2,411.74 an ounce while U.S.

gold futures fell 0.64% to $2,399.50 an ounce.