GLOBAL MARKETS-Stocks gain on merger activity, dollar rises

* China shares hit seven-year high on new Silk Road project

* Deals on both sides of Atlantic lift European, U.S. shares

* Dollar broadly higher as Fed seen raising rates this year

* Oil slips as traders await Iran nuclear talks (Adds close of European stock, bond markets)

By Herbert Lash

NEW YORK, March 30 (Reuters) - The dollar rose and global equity markets surged on Monday on merger and acquisition activity among drugmakers on both sides of the Atlantic, while Chinese stocks hit a seven-year high on an ambitious government plan to create a modern Silk Road.

A spate of deals lifted major U.S. and European indexes more than 1 percent as the dollar gained versus other currencies on the view the Federal Reserve will raise interest rates this year.

Health insurer UnitedHealth Group Inc agreed to buy Catamaran Corp in a deal worth about $12.8 billion. Also on Monday, Israel's Teva Pharmaceutical Industries said it would buy U.S. biopharmaceutical firm Auspex Pharmaceuticals Inc (NasdaqGM: ASPX - news) for an equity value of $3.5 billion, and Ireland (Other OTC: IRLD - news) 's Horizon Pharma Plc (NasdaqGS: HZNP - news) agreed to buy U.S. drugmaker Hyperion Therapeutics Inc (NasdaqGS: HPTX - news) for about $1.1 billion.

Earlier, China unveiled details of an ambitious plan to improve links from Asia to Europe and Africa that President Xi Jinping said in a decade would generate $2.5 trillion in annual trade with the countries involved.

A rally in technology shares in Europe tracked Friday's surge in the U.S. tech sector, helping equities bounce back from losses last week.

Germany's DAX index rose 1.8 percent, just 1 percent below its all-time high, while the FTSEurofirst index of 300 leading European companies gained 1.18 percent to close at 1,596.31.

MSCI (NYSE: MSCI - news) 's all-country world index rose 0.7 percent.

On Wall Street, the Dow Jones industrial average rose 274.29 points, or 1.55 percent, to 17,986.95. The S&P 500 is up 23.26 points, or 1.13 percent, to 2,084.28 and the Nasdaq Composite added 45.97 points, or 0.94 percent, to 4,937.19.

"A lot of it is certainly merger related, there's no question about that, and that gins up confidence among everyday investors. If the insiders are willing to make big acquisitions, why not the rest of us?" said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

The euro slumped against the dollar on worries whether Greece would secure funds from a 240 billion euro aid package before it runs out of cash in three weeks.

Athens sounded upbeat about the talks with its creditors, while Germany called for a more detailed list of reforms.

The single currency was down 0.57 percent against the dollar at $1.0825, bringing its quarterly decline to about 10.4 percent, its largest since the third quarter of 2008.

The dollar rebounded after comments late Friday from Fed Chair Janet Yellen underscored the view that the U.S. central bank is likely to start raising rates gradually later this year.

The dollar index, a gauge of the greenback's value against a basket of currencies, climbed 0.70 percent to 97.976 after back-to-back weeks of losses.

The greenback was up 0.81 percent against the yen at 120.07 yen.

Oil prices slipped as officials from Iran and six world powers discussed a possible deal over Tehran's nuclear program that could bring an end to sanctions and allow an increase in Iranian oil exports.

The two sides have until the end of Tuesday to come up with an agreement at talks in Lausanne, Switzerland.

Brent crude was down 85 cents at $55.56 a barrel. U.S. crude was down 42 cents at $48.45.

U.S. Treasury debt prices softened, giving back some gains from last week as equity markets rose.

As Wall Street stocks jumped, yields on the 10-year note stayed well below the 2 percent touched last week and were last at 1.9632 percent on a price decline of 4/32.

German 10-year yields fell 2 basis points to 0.19 percent as data showed consumer prices up 0.1 percent on the year in March.

(Reporting by Herbert Lash; Editing by Meredith Mazzilli and Chris Reese)