(Refiles to show in 16th paragraph full name and title for UK Prime Minister Theresa May)
* Wall St surges on earnings, hopes of end to govt shutdown
* Risk-on shift sends European shares near 2-month highs
* Euro/dollar rebounds after dovish ECB meeting
* Oil climbs up on Venezuela turmoil despite surging U.S. supply
By Sinéad Carew
NEW YORK, Jan 25 (Reuters) - Wall Street indexes rallied and bond yields followed stocks higher on Friday on hopes U.S. lawmakers would reach an agreement to end the longest government shutdown in history.
The dollar index fell, however, from the previous day's three-week highs, as traders eyed next week's Federal Reserve policy meeting when it is expected to leave interest rates unchanged.
The U.S. Senate was seeking a compromise Friday as hundreds of thousands of federal workers missed a second paycheck, intensifying concerns about a resulting economic impact.
After causing the impasse over a fight about funding for a border wall, President Donald Trump suggested on Thursday that he could be open to a "a pro-rated down payment for the wall."
"That signals an openness and willingness to compromise. It signals that we could see an open government as soon as Monday. There's real pressure mounting on the White House at this point," said Oliver Pursche, chief market strategist of Bruderman Asset Management in New York.
"That gives investors hope. Earnings data has been strong. Economic data has not been bad and so what's kept a lid on stocks is the political shutdown."
The Dow Jones Industrial Average rose 228.62 points, or 0.93 percent, to 24,781.86, the S&P 500 gained 25.04 points, or 0.95 percent, to 2,667.37 and the Nasdaq Composite added 89.21 points, or 1.26 percent, to 7,162.67.
The pan-European STOXX 600 index rose 0.61 percent and MSCI's gauge of stocks across the globe gained 1.05 percent after touching its highest point since early December.
However, not all investors were optimistic as some turned to gold, often seen as safe-haven bet. Spot gold added 1.4 percent to $1,298.39 an ounce, helped by the dollar decline.
In currency, the euro rebounded against the dollar after falling to its lowest level in six weeks Thursday when European Central Bank President Mario Draghi did not alter a downbeat assessment on the euro zone's economy.
The euro was up 0.91 percent to $1.1408.
According to the latest Reuters polls of hundreds of economists from around the world, a synchronised global economic slowdown is under way and any escalation in the U.S.-China trade war would trigger a sharper downturn.
In a note to clients, UBS Global Wealth Management's Chief Investment Officer Mark Haefele said that rhetoric on U.S.-China trade has become more positive, and that Beijing has taken steps to stimulate its economy.
"While economic and earnings growth is slowing, we believe it is unlikely that growth will drop far below trend," he said.
Chinese Vice Premier Liu He will visit the United States on Jan. 30 and 31 for the next round of trade negotiations with Washington.
The British pound was up 0.8 percent after The Sun newspaper reported on Thursday that Northern Ireland's Democratic Unionist Party has privately decided to back UK Prime Minister Theresa May's Brexit deal next week if it includes a clear time limit to the Irish backstop.
In U.S. Treasuries, 10-year yields bounced from a one-week low as looming Treasury supply next week and caution ahead of the Federal Reserve's policy meeting and the government's payrolls report added upward pressure.
Benchmark 10-year notes last fell 8/32 in price to yield 2.7405 percent, from 2.712 percent late on Thursday.
Oil prices rose as political turmoil in Venezuela threatened to reduce supply but fresh data on surging U.S. fuel stocks and global economic woes weighed on sentiment.
Brent crude futures rose 43 cents to $61.52 a barrel, a 0.7 percent gain, by 11:52 a.m. EST (1652 GMT). U.S. West Texas Intermediate (WTI) crude futures rose 54 cents to $53.67 a barrel, a 1.0 percent gain.
Additional reporting by Gertrude Chavez-Dreyfuss, April Joyner, Richard Leong in New York, Ritvik Carvalho and Sujata Rao in London, Shinichi Saoshiro in Tokyo Editing by Jon Boyle and Nick Zieminski