(Updated at 2:40 p.m. ET/1440 GMT)

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US consumer sentiment slumped in May, survey says

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European stocks post fifth week of gains

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Oil steadies after Thursday's drop

By Chris Prentice and Stella Qiu

NEW YORK/SYDNEY, May 16 (Reuters) -

Wall Street gained on Friday, as European shares climbed to

a fifth straight weekly gain on upbeat earnings that helped

sustain the rally sparked by a U.S.-China trade truce.

Gold prices were set for their biggest weekly loss

since November.

Oil futures notched a weekly gain but remain relatively low,

further supporting stocks and bonds.

MSCI's gauge of stocks across the globe

rose 0.39%.

U.S. consumer sentiment slumped further in May as one-year

inflation expectations surged as households remained concerned

about the economic impact of President Donald Trump's aggressive

and often erratic trade policy, a University of Michigan survey

showed.

Yields on U.S. Treasuries fell after data showed weaker

housing starts than expected.

The Dow Jones Industrial Average rose 304.91

points, or 0.72%, to 42,627.66, the S&P 500 rose 34.06

points, or 0.58%, to 5,950.99 and the Nasdaq Composite

rose 79.87 points, or 0.41%, to 19,189.87.

It has largely been a positive week for global equity

markets, as investors cheered a tariff truce between the United

States and China that greatly reduces the risk of a global

recession.

"The risk-on mood is still here on markets," said Nabil

Milali, strategist Multi-Asset & Overlay at Edmond de

Rothschild, also pointing to news that the European Union and

the U.S. have agreed to intensify talks on a possible trade

agreement, and a better-than-expected earnings season.

"The fact that we have more positive surprises is a very

good thing for European stocks."

The pan-European STOXX 600 index finished up

0.4%, rounding off a fifth week of gains, as strong corporate

results bolstered gains seen on the trade war pause.

Earnings in the region have shown resilience, with

first-quarter results now expected to increase more than

previously thought, LSEG data showed earlier in the week.

U.S. import prices unexpectedly rose in April as a surge in

the cost of capital goods offset cheaper energy products.

"We are in the early stages of a trade transition. As of

April, the impacts are unclear; however, we know that

uncertainty pushed residential builders off balance," said

Jeffrey Roach, Chief Economist for LPL Financial in Charlotte,

North Carolina, on import prices and housing and building data.

Data showed U.S. single-family housing starts fell 2.1%

on a seasonally adjusted basis in April as tariffs on imported

materials and high mortgage rates remained obstacles for the

housing market. The report helped push yields lower.

MSCI's main gauge of Asia-Pacific stocks ex-Japan

rose more than 3% this week.

Oil prices have been choppy this week, rising on the

U.S.-China deal, before falling 2% on Thursday on increased

supply pressure from an OPEC+ output hike and the prospect of an

Iranian nuclear deal.

Brent futures settled up 1.4%.

U.S. core retail sales were soft and producer prices fell

unexpectedly in April, increasing market bets to 57 basis points

of easing from the Federal Reserve this year, from 49 bps.

"The relief from softer U.S. retail sales and PPI was

palpable in the bond market yesterday and overnight," said

Kenneth Broux, head of corporate research FX and rates at

Societe Generale.

"This poured cold water on the (global) bond sell-off and

put the brakes on the hawkish repricing of the Fed outlook."

The benchmark 10-year Treasury yield fell 1.6

basis points to 4.439%, extending Thursday's drop. Euro zone

government bond yields were also lower.

Walmart ( WMT ), the world's largest retailer, said it would

have to start raising prices later this month due to the high

cost of tariffs.

"The relief is just temporary," Edmond de Rothschild's

Milali said, as the tariff shock is still "very significant."

The dollar edged higher against a basket of currencies

.

Spot gold fell 1.6% to $3,188.25 an ounce and

U.S. gold futures finished down 1.2%.