*

Fed's cautious optimism raises hopes of imminent rate cut

*

Dollar edges down, sterling gains

*

Oil rises as data shows larger than expected crude draw

(Updated prices at 11:24 a.m ET/1524 GMT)

By Sinéad Carew and Lawrence White

NEW YORK/LONDON, July 10 (Reuters) -

A global equities gauge rose to record levels on Wednesday

while the U.S. Treasury 10-year yield fell slightly as investors

awaited U.S. inflation data and eyed comments by Federal Reserve

Chair Jerome Powell for clues about interest rate cut prospects.

The U.S. dollar edged lower while the euro rose slightly and

sterling rallied as comments from the Bank of England's chief

economist dampened expectations for an August rate cut.

This was after

Powell told Congress

on Tuesday - day one of a two-day appearance - that since

the U.S. economy was no longer running too hot the central bank

has to weigh risks, and that cutting rates would make sense when

more progress is made on inflation. However, Powell did not

signal a timing for cuts.

So with the absence of any big economic data releases on

Wednesday, Matt Stucky, chief portfolio manager for equities at

Northwestern Mutual Wealth Management, said investors were

looking back to Powell's comments on Tuesday and ahead to June's

Consumer Price Index report (CPI), due out on Thursday.

"The momentum from yesterday has carried through," said

Stucky. "Investors are cautiously optimistic that we'll start

cutting rates in September, and probably looking at tomorrow's

CPI print as a pretty crucial data point for taking that

confidence level higher as you think about the next easing

regime from the Federal Reserve."

The closely-watched monthly U.S. inflation report is due

on Thursday, where core consumer prices are expected to hold

steady in June.

On

Wall Street

at 11:24 a.m. EDT (1524 GMT), the Dow Jones Industrial

Average was up 57.44 points, or 0.14%, to 39,348.90, the

S&P 500 gained 16.85 points, or 0.30%, to 5,593.83 and

the Nasdaq Composite advanced 73.28 points, or 0.40%, to

18,502.61.

MSCI's gauge of stocks across the globe

rose 3.03 points, or 0.37%, to 820.81 while Europe's STOXX 600

index was up 0.92%.

In Treasuries, the yield on benchmark U.S. 10-year notes

fell 0.2 basis points to 4.298% from 4.3% late on

Tuesday, while the 30-year bond yield declined 0.6

basis points to 4.489%.

The 2-year note yield, which typically moves

in step with interest rate expectations, fell 0.2 basis points

to 4.6263% from 4.628% late on Tuesday.

In

currencies

, the dollar dipped against the euro with Powell's testimony

in focus.

The dollar index, which measures the greenback

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

fell 0.09% at 105.03, with the euro up 0.1% at $1.0823.

Against the Japanese yen, the dollar strengthened

0.24% to 161.7. Sterling firmed 0.46% to $1.2841.

In commodities, oil prices rose as U.S. data showed

larger than expected draws on crude and the Organization of the

Petroleum Exporting Countries kept its growth forecast for oil

demand unchanged for this year and next.

U.S. crude gained 1.2% to $82.39 a barrel and Brent

rose to $85.46 per barrel, up 0.93% on the day.

Gold prices

rose on raised expectations for U.S. interest rate cuts,

while investors awaited for Thursday's inflation data with a

view to bolstering those expectations.

Gold added 0.57% to $2,377.13 an ounce. U.S. gold

futures gained 0.72% to $2,377.00 an ounce.