Stocks rally on corporate earnings hope

By Herbert Lash

NEW YORK (Reuters) - Global stocks snapped back on Monday following positive comments on financial shares from an influential bank analyst who is normally bearish, while the U.S. dollar rebounded off a five-month low against the yen.

Prices of U.S. Treasuries, which had traded mixed, turned lower after the U.S. government announced a $94.32 billion (58.09 billion pounds) budget deficit in June, a record for the month.

Oil prices briefly touched their lowest level in almost two months, slipping below $59 a barrel, on lingering concerns over the global economy.

But copper prices and New York gold futures reversed initial losses to trade higher, taking their lead from the rally on Wall Street, which lifted stocks more than 2 percent.

Hopes that U.S. earnings may not be as weak as initially feared sparked the stock rally and helped the euro to rise broadly.

Wall Street analyst Meredith Whitney upgraded Goldman Sachs (GS.N) to "buy" and told New York-based business television station CNBC that bank shares were in for at least a short-term gain of 15 percent. Major financials, including Bank of America (BAC.N) and JPMorgan Chase (JPM.N), could do well in the second quarter, she said.

The S&P Financial Index .GSPF gained 6.5 percent, while Goldman rose 5.3 percent, Bank of America surged 9.3 percent and JPMorgan climbed 7.3 percent.

European shares rallied, recouping some of last week's steep losses, as banks tracked advances in U.S. financials.