GLOBAL MARKETS-Wall Street stocks outperform Europe on megacap earnings boost

By Sinéad Carew and Alun John

NEW YORK/ LONDON, July 31 (Reuters) - Wall Street outperformed European equities on Thursday, boosted by megacap earnings reports, even as data showed signs of rising inflation and investors watched for last-minute trade deals ahead of U.S. President Donald Trump's August 1 deadline.

U.S. Treasury yields briefly pared declines in choppy trading after data showed that U.S. inflation increased in June as tariffs on imports started raising the cost of some goods, supporting economists' expectations that price pressures would pick up in the second half of the year.

The Federal Reserve kept rates steady on Wednesday, and chair Jerome Powell said that the central bank needed to wait for more data before deciding whether to adjust rates in September, drawing further criticism from Trump on Thursday.

"Anybody hoping for the Fed to move more aggressively in the near term continues to be disappointed that it comes back to both the inflation and the job story. The PCE data this morning reinforced the inflation worries the Fed still has and helps explain why it's in no hurry to move at this point," said Jim Baird, Chief Investment Officer with Plante Moran Financial Advisors.

But while Powell's comments had sent equities lower on Wednesday, U.S. indexes rebounded on Thursday after better-than-expected results from Microsoft MSFT.O and Meta Platforms META.O.

"A couple of solid earnings reports last night suggest that one of the key themes that's been driving the stock market this year is still seemingly intact. You've seen a nice rebound in tech today, or nice surge in tech today.

"The AI theme, the enthusiasm around the technology sector still appears to be intact. So that's a positive catalyst for the market," said Baird.

On Wall Street, indexes lost some steam as the session progressed.

At 11:14 a.m., the Dow Jones Industrial Average .DJI fell 123.28 points, or 0.28%, to 44,338.00. The S&P 500 .SPX rose 13.57 points, or 0.21%, to 6,376.47 and the Nasdaq Composite .IXIC rose 119.18 points, or 0.56%, to 21,248.86, both around session lows.

In Europe, however, the broad Stoxx 600 .STOXX benchmark was weighed down by miners after U.S. September Comex copper futures fell 22%, the biggest decline on record, after Trump said the U.S. would impose a 50% tariff on copper pipes and wiring.MET/L

The pan-European STOXX 600 .STOXX index was down 0.73% while MSCI's gauge of stocks across the globe .MIWD00000PUS fell 1.07 points, or 0.11%, to 933.26.

Earlier, Chinese stocks also retreated after official PMI gauges showed weaker than expected economic activity in July. China's blue chip CSI 300 had ended 1.8% lower, its biggest single day drop since April 7, and Hong Kong's .HSI index closed 1.6% lower.

In currencies, the U.S. dollar had a mixed performance on the day. The dollar index =USD, which measures it against a basket of currencies, including the yen and the euro, rose 0.05% to 99.83.

The euro EUR= was up 0.34% at $1.1443.

But against the Japanese yen JPY=, the dollar strengthened 0.59% to 150.39. The Bank of Japan held interest rates steady and increased its inflation forecast.

The Korean won KRW= weakened 0.2% against the dollar to 1,395.78 per dollar after rising earlier following Trump's announcement that the U.S. would charge a 15% tariff on imports from South Korea, which would in return invest $350 billion in U.S. projects and purchase $100 billion in U.S. energy products.

In Treasuries, the yield on benchmark U.S. 10-year notes US10YT=RR fell 4.6 basis points to 4.332%, from 4.378% late on Wednesday while the 30-year bond US30YT=RR yield fell 5.1 basis points to 4.8624%.

The two-year note US2YT=RR yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 1.9 basis points to 3.918%, from 3.937% late on Wednesday.

In oil markets, prices fell after rising for the prior three sessions as investors weighed the supply risks from Trump's push for a swift resolution to the war in Ukraine through more tariffs and a surprise build in U.S. crude stocks put pressure on prices.

U.S. crude CLc1 fell 1.71% to $68.79 a barrel and Brent LCOc1 fell to $72.47 per barrel, down 1.04% on the day.

Gold prices rose as traders turned to the safe haven asset amid ongoing tariff uncertainty, ahead of the August 1 tariff deadline. Spot gold XAU= rose 0.63% to $3,295.33 an ounce.