GLOBAL MARKETS-Euro rises as ECB rate cut seen unlikely, Dow at record high

* Euro regains footing; ECB under pressure to boost stimulus

* Wall St gains on Fed rate expectations

* Fed's Williams says wait for more evidence before tapering

* European shares inch up to 5-year highs

By Herbert Lash

NEW YORK, Nov 6 (Reuters) - Global stock markets rose on

Wednesday and the Dow industrials marked a record closing high

as investors seized on signs that the Federal Reserve may keep

rates low for longer than expected.

Strong data from Germany also cheered investors and stoked

speculation that the European Central Bank will not cut rates

when it meets on Thursday despite a steep decline in inflation.

The expectations on the ECB lifted the euro 0.4 percent to

$1.3522, though traders said surveys showing only modest

growth in French and German businesses would likely cap the

currency's gains.

Expectations on the Fed's path were influenced by remarks by

John Williams, president of the San Francisco Federal Reserve

Bank, who late on Tuesday said the Fed should wait for stronger

evidence of economic growth before winding down its massive

bond-buying program.

Two of the Fed's top staff economists made the case in new

research papers for more aggressive action by the U.S. central

bank to drive down unemployment by promising to hold interest

rates lower for longer.

The notion of lower interest rates for longer helped lift

the Dow industrials to a record high, while a Reuters report

that Microsoft (Berlin: MSF.BE - news) had narrowed its CEO search lifted

shares in the tech giant, buoying the S&P 500 index.

"What's seeping into the market is the increasing likelihood

(the Fed) will keep zero percent interest rates for 18 months

longer than they had signaled previously," said Steven Einhorn,

vice chairman at hedge fund Omega Advisors Inc., which oversees

about $9.7 billion in assets.

The Fed has concluded that its bond-buying is no longer that

effective, and the size of its balance sheet is getting to be

problematic, he added.

The Dow Jones industrial average finished at a record

closing high, up 128.66 points, or 0.82 percent, at 15,746.88,

after earlier reaching a lifetime high of 15,750.29. The

Standard & Poor's 500 Index ended up 7.52 points, or 0.43

percent, at 1,770.49.

A 14.5 percent plunge in shares of Tesla Motors Inc (Xetra: A1CX3T - news)

, after the electric car maker gave a disappointing

outlook for its fourth quarter late Tuesday, weighed on the

Nasdaq Composite Index, which ended down 7.92 points, or

0.20 percent, at 3,931.95.

In Europe, the FTSEurofirst 300 of leading regional

shares rose 0.39 percent to close at 1,296.58, after briefly

touching 1,300 for the first time since early June 2008.

MSCI (NYSE: MSCI - news) 's all-country world stock index rose

0.45 percent.

Estimate-beating earnings from financial conglomerate ING

and staffing firm Adecco (VTX: ADEN.VX - news) , among other

corporate results, gave fresh impetus to the largely

stimulus-driven rally.

U.S. government debt traded mixed. The benchmark 10-year

U.S. Treasury note was up 4/32 in price to yield

2.65 percent, while the 30-year bond was down in

price.

"The market is trying to digest whether the new Fed makeup

and the new Fed thinking will be more prone to be keeping the

short rates lower for longer and not depend so much on QE," said

Vishal Khanduja, a portfolio manager with Calvert Investments in

Bethesda, Maryland.

President Barack Obama nominated Fed Vice Chair Janet Yellen

last month to succeed Ben Bernanke when his term expires in

January.

Brent oil settled down 9 cents at $105.24 a barrel, while

U.S. oil $1.52 to $94.89 per barrel.

Data from the Energy Information Administration showed U.S.

gasoline stocks fell by 3.8 million barrels last week, compared

with forecasts in a Reuters poll for a 300,000 barrel decline.