Updates prices to U.S. morning trading

By Sinéad Carew and Danilo Masoni

NEW YORK/ MILAN, July 15 (Reuters) - MSCI's global equities index rose on Wednesday after a surprise drop in the U.S. inflation reading and a second day of strong earnings reports while oil futures turned lower even as U.S.-Iran hostilities showed no signs of abating.

U.S. producer prices were softer than expected in June in another indication - along with consumer price data released on Tuesday - that inflation was retreating before the recent escalation in the Middle East conflict.

The Labor Department's Bureau of Labor Statistics said on Wednesday that the Producer Price Index for final demand dropped 0.3% last month compared with economist forecasts that it would be unchanged.

Meanwhile, the U.S. conducted a new wave of strikes against Iran's coastal defence systems and cruise missile storage and launch sites on Wednesday after reimposing a naval blockade of Iranian ports, while Iran threatened to shut off more regional energy exports.

Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey, suggested that while the latest inflation data was supporting stocks on Wednesday, investors were ignoring concerns about Iran and the fact that June's readings don't reflect recent increases in oil prices.

"We're in a market phase where bad news doesn't seem to hurt the market and bad news that isn't quite as bad as we thought it would be really helps the market," Meckler said.

And Wednesday's earnings reports also helped sentiment after Tuesday's strong start to the reporting season from some Wall Street banks. Morgan Stanley MS.N on Wednesday reported a second-quarter profit increase from strong mergers and acquisitions activity. BlackRock's BLK.N quarterly profit rose, as a stock market rally boosted client asset values. And in healthcare, Johnson & Johnson's JNJ.N sales and profit beat analyst expectations.

At 11:44 a.m. ET (1545 GMT) the Dow Jones Industrial Average .DJI rose 172.89 points, or 0.33%, to 52,681.16, the S&P 500 .SPX rose 12.74 points, or 0.17%, to 7,556.33 and the Nasdaq Composite .IXIC rose 86.70 points, or 0.33%, to 26,193.95.

The MSCI World Price Index .MIWO00000PUS rose 5.20 points, or 0.46%, to 1,126.77 while the pan-European STOXX 600 .STOXX index rose 0.12%.

Earlier, South Korea's tech-heavy KOSPI .KS11 index closed up more than 6%, with memory chip maker SK Hynix 000660.KS jumping 8.8% in Seoul. However, its U.S.-traded shares were down almost 10% and the Philadelphia semiconductor index sank more than 3%. Earlier, Japan's Nikkei .N225 gained 1.5%.

Meanwhile in government bonds, U.S. Treasury yields fell with the benchmark 10-year Treasury note on track for its first consecutive daily declines in nearly three weeks, after economic data showed an easing of price pressures for a second straight day.

The yield on benchmark U.S. 10-year notes US10YT=RR fell 3.57 basis points to 4.549%, from 4.585% late on Tuesday while the 30-year bond US30YT=RR yield fell 1.98 basis points to 5.0742%.

The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 4.37 basis points to 4.149%.

In currencies, the dollar slipped against major currencies after the data reinforced signs of easing inflation, supporting hopes that the Federal Reserve can remain patient on interest rates.

The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.16% to 100.72, with the euro EUR= up 0.14% at $1.1435.

Against the Japanese yen JPY=, the dollar weakened 0.07% to 162.11.

Oil prices were choppy as traders monitored the Middle East hostilities and the prospects for energy shipping in the Strait of Hormuz.

U.S. crude CLc1 fell 0.98% to $78.56 a barrel and Brent LCOc1 fell to $83.80 per barrel, down 1.1% on the day.

Spot gold XAU= fell 0.11% to $4,048.79 an ounce.