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GLOBAL MARKETS-Wall Street rallies on economic data, crude falls as stockpiles jump

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(Updates to U.S. stock market close)

By Stephen Culp

NEW YORK, Aug 3 (Reuters) - U.S. stocks jumped to a sharply higher close and Treasury yields touched two-week highs on Wednesday as robust economic data, upbeat corporate guidance and easing geopolitical concerns boosted investor risk appetite.

Front-month crude futures dropped following a report that U.S. stockpiles of crude and gasoline unexpectedly surged last week.

All three major U.S. stock indexes advanced and the tech-laden Nasdaq ended the session at a three-month high, with upbeat forecasts from PayPal and CVS Health Corp fueling investor sentiment.

"It's about the fundamentals, it's all about earnings and data," said Oliver Pursche, senior vice president at Wealthspire Advisors in New York. "We've seen decent earnings, and there was robust economic news, and we had several Fed (officials) reassuring statements that the Fed would be able to bring inflation under control."

Economic data showed an unexpected acceleration of services activity and a robust increase in factory orders, suggesting that the economy was healthy enough to withstand the hawkish monetary policy from the U.S. Federal Reserve.

St. Louis Fed President James Bullard underscored that hawkishness by reiterating the central bank's intention to "be tough" on inflation until it cools down to the Fed's average annual 2% target.

U.S. House of Representatives Speaker Nancy Pelosi's wrapped up a brief visit to Taiwan that had provoked ire from China.

The Dow Jones Industrial Average rose 416.33 points, or 1.29%, to 32,812.5, the S&P 500 gained 63.98 points, or 1.56%, to 4,155.17 and the Nasdaq Composite added 319.40 points, or 2.59%, to 12,668.16.

European stocks closed higher, reclaiming losses suffered in recent sessions as a series of upbeat earnings helped investors look past disappointing euro zone economic data.

The pan-European STOXX 600 index rose 0.51% and MSCI's gauge of stocks across the globe gained 1.01%.

Emerging market stocks rose 0.28%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.27% higher, while Japan's Nikkei rose 0.53%.

A drop in oil prices accelerated after a report from the U.S. Energy Information Administration showed an unexpected surge in U.S. crude and gasoline stocks, which followed the OPEC+ group of crude producers' announcement that it would increase its production by a mere 100,000 barrels per day.

"Oil is still up 25% from the beginning of the year," Pursche added. "This recent drop is a combined result of that and a reflection that there is going to be an economic slowdown. The market is trying to find equilibrium."

U.S. crude fell 3.98% to settle at $90.66 per barrel, while Brent settled at $96.78 per barrel, down 3.74% on the day.

U.S. Treasury yields scaled two-week peaks powered by stronger-than-expected data, which supported recent remarks from Fed officials.

"The hawkish comments out of the Fed, sticking to their intention to raise rates, is moving yields back up," said Joseph Sroka, chief investment officer at NovaPoint in Atlanta. "The Fed is holding firm on policy that they've articulated."

Benchmark 10-year notes last rose 11/32 in price to yield 2.7028%, from 2.741% late on Tuesday.

The 30-year bond last rose 24/32 in price to yield 2.9461%, from 2.984% late on Tuesday.

The dollar see-sawed, but was last near flat against a basket of world currencies, building on Tuesday's gains after economic indicators surprised to the upside, which supported the greenback in the wake of recent Fed comments.

The dollar index rose 0.13%, with the euro up 0.04% to $1.0168.

The Japanese yen weakened 0.55% versus the greenback at 133.90 per dollar, while Sterling was last trading at $1.2145, down 0.22% on the day.

Gold rose but the safe-haven metal's gains were held in check by rising Treasury yields.

Spot gold added 0.3% to $1,765.06 an ounce.

(Reporting by Stephen Culp; Additional reporting by Danilo Masoni in Milan; editing by David Evans, Will Dunham and Angus MacSwan)