* Global equities climb as traders reduce rate hike bets

* US producer prices were unchanged in July

* Oil prices drop amid signals of lower demand

(Updated at 1448 (10:48 a.m. ET)

By Chris Prentice and Stefano Rebaudo

NEW YORK/MILAN, Aug 13 (Reuters) - Stocks rose on Thursday

as investors pared back U.S. rate hike bets, while oil prices

dropped as higher inventories and lower global demand forecasts

offset geopolitical concerns.

U.S. producer price data, which was unchanged in July,

reduced expectations for a Federal Reserve rate hike next month,

helping tech stocks power the S&P 500 to an intraday record

high.

Traders scaled back their bets on a September rate hike,

pricing in a 65% probability of the Fed staying on hold next

month versus 50% on Wednesday.

Gold prices pared losses and U.S. Treasury yields extended

their decline after the producer price data.

MSCI's gauge of stocks across the globe rose

7.32 points, or 0.63%, to 1,161.85.

TECH BOOSTS WALL STREET

The Dow Jones Industrial Average rose 113.90 points,

or 0.21%, to 53,884.17, the S&P 500 rose 55.76 points, or

0.72%, to 7,804.26 and the Nasdaq Composite rose 235.69

points, or 0.89%, to 26,824.18.

"Earnings season (for AI infrastructure names) has been

strong and shows no signs of slowdown in Capex," Mohit Kumar, an

economist at Jefferies, said, before stating the bank remained

with an overweight position in the AI sector.

"The background of high amounts of cash in the system and

Fed not hiking (Jefferies view) should continue to support risky

assets," he added.

In Europe, the STOXX 600 index rose 0.12%, while

the broad FTSEurofirst 300 index gained 3.09 points, or

0.12%.

MSCI's broadest index of Asia-Pacific shares outside Japan

closed up 0.96% and emerging market stocks

were 0.92% higher at 1,697.36.

US-IRAN DEADLOCK

Washington and Tehran traded accusations on Thursday over a

deal to reopen the strategically vital Strait of Hormuz, with

the United States saying Iran had failed to meet its obligations

and Iran countering that Washington had not delivered on ending

a blockade of Iranian ports.

Still, Brent crude futures fell to $86.72 per

barrel, down 2.54% on the day, and U.S. crude dropped

2.7% to $81.02, on signs of lower demand.

Commercial crude oil inventories posted their largest weekly

gain since January 2023, and the Organization of the Petroleum

Exporting Countries lowered its world oil demand growth forecast

for 2026.

High energy prices are expected to weigh more heavily on the

economies of the euro zone and Japan, both large energy

importers, while the United States is seen as relatively

insulated from oil shocks.

CURRENCIES, BONDS

The dollar index, which measures the greenback

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

fell 0.1% to 99.85, with the euro up 0.14% at $1.154.

The yield on benchmark U.S. 10-year notes fell

7.29 basis points to 4.619%, and the 30-year bond

yield dropped 6 basis points to 5.187%.

Analysts said the U.S. federal budget deficit's rise to $432

billion is likely to add upward pressure on long-term borrowing

costs.

"I would still be careful chasing rallies (in U.S.

Treasuries), especially in the back end, where supply, fiscal

concerns and oil-related term premium remain hard to dismiss,"

Mizuho strategist Evelyne Gomez-Liechti said, recalling that PPI

data is the next test, alongside jobless claims and the 30-year

U.S. Treasury auction.

The Japanese yen strengthened 0.17% against the

greenback to 159.16 per dollar.

Expectations that the Bank of Japan would hike interest

rates next month, earlier than previously expected, were

reinforced by Japan's producer price index, which rose 7.2% in

July from a year earlier.