September 27, 2018 / 7:09 PM / 23 days ago

GLOBAL MARKETS-U.S. dollar rises on weaker euro, Fed policy; stocks gain

* Italian stocks slump, yields rise as political worries return

* Euro falls back, give dollar boost after Fed hike

* Oil prices near four-year high as Iran sanctions loom

* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh (Adds settled oil prices, Egypt rate decision, gold lower)

By Hilary Russ

NEW YORK, Sept 27 (Reuters) - The U.S. dollar rose held near a one-week high against a basket of major currencies on Thursday following a hike in U.S. interest rates, while a robust economy and surging shares of Apple Inc and Amazon.com Inc boosted the U.S. stock market.

The Federal Reserve on Wednesday raised rates for the third time this year, indicating its confidence in the U.S. economy.

That sentiment carried the dollar higher into a second day and dented the euro, which was further pressured by worries about Italy's budget.

"The Fed is moving faster than most central banks and that's dollar-supportive," said Erik Nelson, currency strategist, at Wells Fargo Securities in New York.

The dollar index rose 0.75 percent, with the euro down 0.7 percent to $1.1656.

The greenback also hit a two-week peak against the Swiss franc and Canadian dollar.

The Dow Jones Industrial Average rose 93 points, or 0.35 percent, to 26,478.28, the S&P 500 gained 12.64 points, or 0.43 percent, to 2,918.61 and the Nasdaq Composite added 62.23 points, or 0.78 percent, to 8,052.60.

Apple rose 2.5 percent at one point, the biggest boost to the three main indexes after JP Morgan started coverage of the stock with an "overweight" rating.

Amazon rose 1.8 percent after brokerage Stifel talked up its businesses.

MSCI's gauge of stocks across the globe gained 0.07 percent.

In Egypt, the central bank left its main interest rate unchanged on Thursday, saying the decision was consistent with achieving inflation targets.

ITALY

Reports that Italy's long-awaited budget was facing delay initially dented European shares, which then recovered. The pan-European FTSEurofirst 300 index rose 0.44 percent.

Italy's main Milan bourse slumped as much as 2 percent , and was last down 0.6 percent, with the country's big banks sinking even more as the country's borrowing costs hit a three-week high in the government bond markets.

Rome confirmed that a cabinet meeting over budget targets was still planned for later, dismissing an earlier report in the Corriere della Sera newspaper that it could be delayed.

Still, Italy's economic ministry was forced to deny that its chief Giovanni Tria, an academic who does not belong to any one party, had threatened to resign.

"It is very fluid and it is changing by the minute it seems," head of EMEA macro strategy at State Street Tim Graf said.

"Even if things get resolved positively today, Italy is not a situation that is going to go away," he added, pointing to the growing popularity of the country's fractious anti-establishment coalition government.

Japan's Nikkei briefly touched an eight-month high as signs that the United States may not impose further tariffs on Japanese automotive products for now lifted carmakers, though the index eventually ended down nearly 1 percent.

Benchmark 10-year notes last rose 2/32 in price to yield 3.0536 percent, from 3.061 percent late on Wednesday.

Spot gold dropped 0.8 percent to $1,184.31 an ounce, tumbling on the stronger dollar.

Oil edged higher, driven by the prospect of a shortfall in global supply once U.S. sanctions against major crude exporter Iran come into force in just five weeks' time.

U.S. crude oil futures settled at $72.12 per barrel, up 55 cents or 0.77 percent. Brent crude futures settled at $81.72, up 38 cents or 0.47 percent.

Reporting by Hilary Russ; Additional reporting by Marc Jones, Amanda Cooper and Peter Hobson in London, Amy Caren Daniel in Bengaluru, Aidan Lewis in Cairo; Renita D. Young and Gertrude Chavez-Dreyfuss in New York; Editing by Bernadette Baum and Lisa Shumaker

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