* Euro hits six-month high
* German, British stocks at record highs
* Gulf between euro zone debt markets narrows
* Dollar hit by Trump’s disclosure, economy fears (Adds quote, updates prices)
By John Geddie
LONDON, May 16 (Reuters) - The euro hit a six-month peak and German stocks touched a record high on Tuesday as signals on further European integration contrasted with political turmoil and fresh doubts about the economy in the United States.
The euro’s rally was reinforced by dollar losses prompted by allegations that U.S. President Donald Trump disclosed highly classified information to Russia’s foreign minister about a planned Islamic State operation.
That conspired with doubts over Trump’s economic policy and a run of weak data to dampen expectations of a rate hike from the world’s biggest economy next month. Wall Street was set to open flat.
Euro zone markets were meanwhile buoyed by robust growth data and talks between Germany and French leaders which sought to reinvigorate a European project shaken by Britain’s planned exit and may even open the door to changing treaties to facilitate ambitious reform.
In bond markets, the premium that investors demand for holding lower-rated southern European debt over top-rated German peers fell sharply in a sign of growing confidence in the bloc’s economic and political outlook.
“There is enough going on independently of the U.S. to have people think more benignly about the euro,” said Donal O‘Mahony, global strategist at Davy in Dublin.
“We are sharing responsibility and we are conforming and Europe can be more unified on some of the other ingredients to the fiscal story than it has been prepared to deliver so far.”
The euro was comfortably the best performing G10 currency on Tuesday, up around 0.8 percent.
The British pound sank to a five-week low against the resurgent euro and the dollar index -- which measures the greenback against six other major currencies -- was down around 0.5 percent on the day.
Analysts said the furore around Trump has raised fears that he might not last a whole term and that, even if he did, there were too many distractions for him to be able to push through his economic stimulus programme.
“(The story about Trump and Russia) probably is playing out as a weaker dollar on the view that Trump may not be around long enough to deliver his tax reform, which is at least partially priced into the dollar,” said RBC Capital Markets currency strategist Adam Cole, in London.
A weak manufacturing report from the New York Federal Reserve on Monday also trimmed expectations of a Federal Reserve rate increase next month, weighing on the currency.
Expectations of a rate increase in June fell to 74 percent compared to 84 percent last week, according to the CME Fedwatch.
An index of world stocks nudged to a new high on Tuesday, with German and British bourses individually breaking all-time records and Asian shares earlier hitting a two-year peak.
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Part of that bounce came from commodity-related firms as oil moved back towards a three-week high breached on Monday,
Brent crude has gained nearly 9 percent this week with top producers supporting prolonging supply cuts until the end of March 2018 in a bid to drain a global glut. Brent crude oil was up 20 cents at $52.02 a barrel by 1010 GMT. U.S. light crude also gained 20 cents at $49.05 a barrel. Both benchmarks have risen more than $5 since hitting five-month lows 10 days ago.
Some analysts though remain sceptical about the durability of the oil rally.
“That is going to be easier said than done, it appears, with U.S. production running at its fastest pace since August 2015 and data yesterday confirming that Chinese growth momentum continues to moderate,” ANZ strategists wrote in a daily note. (Additional reporting by Jemima Kelly and Helen Reid in London and Saikat Chatterjee in Hong Kong; Editing by Andrew Heavens)