* U.S. stocks higher in early afternoon New York trading
* Investors see growing likelihood of delay in UK leaving EU
* Sterling near flat against dollar (Updates with European stocks closing prices)
By Caroline Valetkevitch
NEW YORK, Jan 16 (Reuters) - Major world stock indexes rose on Wednesday, with the S&P 500 supported by gains in U.S. bank stocks after strong earnings, while the pound was steady ahead of a no-confidence vote in British Prime Minister Theresa May's government.
Investors saw potential for legislative deadlock forcing London to delay its departure from the European Union following the parliamentary defeat of May's Brexit deal late Tuesday. The no-confidence vote is expected at 1900 GMT.
May is expected to survive the vote, sponsored by the main opposition Labour Party. Expectations of a softer Brexit - perhaps incorporating the Labour Party's idea of membership of a permanent customs union - gave some support to the pound.
Sterling was last trading at $1.2858, flat on the day.
"We do think it is unlikely that sterling will fall to fresh lows unless the current government falls, and that is unlikely although the risk is not zero," said Alvin Tan, an FX strategist at Societe Generale in London.
Stocks had mostly priced in the Tuesday Brexit vote's defeat and traded higher. The pan-European STOXX 600 index rose 0.54 percent and MSCI's gauge of stocks across the globe gained 0.23 percent.
On Wall Street, strong earnings from Bank of America and Goldman Sachs helped to keep stocks in positive territory. Bank of America shares were up more than 7 percent while Goldman's stock was up about 8 percent.
"There is hope for this earnings season, and Goldman Sachs and Bank of America have got it started off on the right foot," said Jake Dollarhide, chief executive officer at Longbow Asset Management in Tulsa, Oklahoma.
The Dow Jones Industrial Average rose 142.94 points, or 0.59 percent, to 24,208.53, the S&P 500 gained 8.47 points, or 0.32 percent, to 2,618.77 and the Nasdaq Composite added 16.81 points, or 0.24 percent, to 7,040.65.
The dollar rose against the euro as the euro zone single currency was pushed lower by worries about the zone's economy, with the euro down 0.09 percent to $1.1404.
Earlier this week, data showed Germany barely escaped a recession in the second half of 2018 and European Central Bank chief Mario Draghi warned on Tuesday the euro zone economy was weaker than anticipated.
In sovereign debt markets, British government bonds underperformed versus German peers in early trade.
U.S. Treasury yields rose as stronger-than-forecast results from two major banks lifted Wall Street, reducing safe-haven demand for U.S. government debt.
Benchmark 10-year notes last fell 4/32 in price to yield 2.72 percent, from 2.708 percent late on Tuesday.
Oil prices steadied after climbing about 3 percent in the previous session, with data showing growing U.S. refined product inventories and record crude production.
Brent crude futures rose 3 cents to $60.67 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 28 cents to $51.83.
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Additional reporting by Tom Wilson in London and Medha Singh in Bengaluru Editing by Mark Heinrich and James Dalgleish