* Deaths from COVID-19 reached half a million on Sunday
* Sterling drops on infrastructure funding concerns
* Boeing boosts industrial stocks in the U.S. (Updates prices, changes comment)
By Rodrigo Campos
NEW YORK, June 29 (Reuters) - A gauge of stocks across the world rose on Monday, led by a rebound on Wall Street, even as rising COVID-19 cases threaten to stall the recovery of the world's largest economy.
Contracts to buy U.S. previously owned homes rose by the highest percentage on record in May. But they remained below their February level and were down compared with May 2019, which also kept alive expectations for even more economic stimulus.
"The market believes that the (Federal Reserve) has its back," said Sam Stovall, chief investment strategist at CFRA Research in New York.
"If things get really bad, the Fed will step in with additional monetary easing and basically reach into their bag of tricks to do whatever they need to support the market."
Confirmed COVID-19 cases worldwide rose past 10 million and deaths surpassed 500,000 on Sunday. The relentless spread of the new coronavirus in the United States, Latin America and elsewhere curbed optimism over the global economy and raised worries that some reopening plans will be delayed.
A rally in Boeing shares after U.S. authorities confirmed that 737 MAX certification flights could start Monday gave life to the Dow industrials, while factory- and materials-heavy sectors of the S&P 500 boosted the benchmark index.
The Dow Jones Industrial Average rose 498.99 points, or 1.99%, to 25,514.54, the S&P 500 gained 38.27 points, or 1.27%, to 3,047.32 and the Nasdaq Composite added 100.26 points, or 1.03%, to 9,857.48.
The pan-European STOXX 600 index rose 0.44% and MSCI's gauge of stocks across the globe gained 0.59%.
Emerging market stocks lost 0.53%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.95% lower, while Japan's Nikkei futures rose 0.36%.
It is an important week for U.S. data, with the ISM manufacturing index on Wednesday and monthly payrolls on Thursday, moved up a day due to observance of the Independence Day holiday on Friday. Fed Chair Jerome Powell is testifying on Tuesday.
Bill Merz, head of fixed income research at U.S. Bank Wealth Management in Minneapolis, said he expected small changes for long-term yields, noting that Treasuries may be "one of the least-interesting markets for the rest of the year" due to the Fed's influence on the short end of the curve.
Benchmark 10-year notes last fell 2/32 in price to yield 0.6446%, from 0.638% late on Friday.
In currency markets, Sterling fell against both the dollar and euro as investors focused on how Britain's government will pay for its planned infrastructure push, while Brexit-related risks kept pressure on the pound.
Sterling was last trading at $1.2289, down 0.36% on the day after falling nearly 0.7% earlier.
The dollar index rose 0.097%, with the euro up 0.08% to $1.1226.
The Japanese yen weakened 0.54% versus the greenback at 107.74 per dollar.
U.S. crude recently rose 3.14% to $39.70 per barrel and Brent was at $41.78, up 1.85% on the day.
(Reporting by Rodrigo Campos; Additional reporting by Joice Alves and Thyagaraju Adinarayan in London, Uday Sampath Kumar and Devik Jain in Bengaluru, Stephanie Kelly in New York and Karen Pierog in Chicago; Editing by Dan Grebler)