Global Markets: Stocks hit two-week high as banks lead ahead of earnings

NEW YORK (Reuters) - Global stocks hit a two-week high on Monday with bank shares leading the drive higher ahead of earnings reports from the biggest U.S. lenders later in the week, while sterling took at hit after another British cabinet resignation.

The S&P 500 Index <.SPX> gained 0.80 percent, led by a nearly 3 percent surge in bank stocks <.SPXBK>, their biggest daily rise since March. A pickup in bond yields and optimism about the coming earnings-reporting season with JPMorgan , Wells Fargo and Citigroup due to report on Friday were seen as the primary drivers to the upside.

Overall, S&P 500 profits appear on track for another quarter of greater than 20 percent year-over-year growth, according to Thomson Reuters estimates. That has helped blunt concerns about the deteriorating global trade scene after the United States and China slapped tariffs on some $34 billion of each other's goods on Friday.

"The market is anticipating a very good earnings season and ignoring any trade issues," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Bank shares also found support from the first notable uptick in U.S. Treasury yields in two weeks. The yield on the 10-year note rose 3 basis points to nearly 2.86 percent.

European and Asian stocks ended in the black as well, with the pan-European STOXX 600 <.STOXX> index was up 0.58 percent, led by a strong bounce across mining and energy stocks. MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> climbed 1.3 percent, on top of a 0.7 percent rally on Friday when the launch of U.S. tariffs on Chinese imports came and went without too many fireworks.

The pound lost ground after Foreign Minister Boris Johnson added his name to the clutch of British cabinet ministers to quit in protest over Prime Minister Theresa May's plan for leaving the European Union.

Sterling had been whipsawed a bit by the two other ministerial departures, including Brexit Minister David Davis, but it was the Johnson's announcement that pulled the rug out. The pound dove more than 1 percent at one point and was still about 0.67 percent below where it had been beforehand. It was 0.25 percent below Friday's close.

Britain's FTSE <.FTSE> gained 0.92 percent, helped by the currency's weakness.

The drop in sterling helped cushion the dollar more broadly against a basket of currencies, with the dollar index firming fractionally to 94.079 <.DXY>. The euro was near the unchanged mark at $1.1747 .

In commodity markets, oil prices pushed higher as the dollar eased. Brent rose $1.12 to $78.23 a barrel, and U.S. light sweet crude rose 21 cents to $74.

Gold was 0.4 percent firmer at $1,259.46 an ounce .

(Reporting by Kit Rees in London and Sruthi Agrawal in Bangalore; writing by Dan Burns; Editing by Nick Zieminski)

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