GLOBAL MARKETS-U.S. oil surges past $70, dollar hits fresh 2018 high

(Adds close of U.S. market)

* Venezuela crisis, Iran nuclear pact drive oil prices higher

* Dollar rallies to 2018 high as euro dips below $1.19

* Nestle (Swiss: NESN.VX - news) deal with Starbucks (Hanover: SRB.HA - news) , energy stocks lift equities

By Herbert Lash

NEW YORK, May 7 (Reuters) - The dollar rose to fresh 2018 highs on Monday while oil prices climbed to their highest since late 2014, driven by declining Venezuelan crude production and worries the United States could re-impose sanctions on Iran.

The crude surge lifted energy stocks in Europe and on Wall Street, with European shares supported by strong results and gains in Nestle after the Swiss company agreed to pay $7.15 billion to Starbucks in a global coffee alliance.

The euro broke below $1.19 for the first time this year on weaker-than-expected German industrial orders and declining euro zone investor sentiment.

Investors increased bets that rising U.S. interest rates would continue to boost the dollar, while traders unwound their bearish positions on the greenback.

An index that tracks the dollar against a basket of leading currencies climbed to 92.974, its highest since December. The index was last up 0.23 percent at 92.782.

"The general view right now is that the dollar is probably going to continue to move a bit higher against the euro in particular, maybe against the yen as well," said Larry Hatheway, chief economist at GAM Investment Solutions.

The euro could slip to $1.1750 or even $1.15 as a support level as the Federal Reserve tightens monetary policy and the European economy trends weaker, he said.

"There's a general appreciation the Fed is going to move at least twice again this year and the consensus is shifting toward three more moves this year."

The euro fell 0.3 percent to $1.1922, while the Japanese yen slipped 0.04 percent to 109.07 per dollar.

Venezuelan oil exports came under threat after U.S. oil major ConocoPhillips (NYSE: COP - news) moved to take Caribbean assets of state-run PDVSA to enforce a $2 billion arbitration award, three sources told Reuters.

The move could further crimp PDVSA's declining oil output and exports.

Widespread expectations that President Donald Trump will withdraw the United States from the Iranian nuclear pact also weighed on crude prices.

U.S. crude rose $1.01 to settle at $70.73 a barrel, breaking above the $70 mark for the first time since November 2014, while Brent gained $1.30 to settle at $76.17.

Nestle rose 1.6 percent after it gained the rights to market Starbucks products around the world outside of the U.S. company's coffee shops.

Nestle was the biggest contributor to the 0.59 percent advance in the pan-European FTSEurofirst 300 index of leading regional shares. Oil giants Royal Dutch Shell (LSE: 0LN9.L - news) and Total (LSE: 524773.L - news) were the fourth- and seventh-biggest contributors, respectively.

On Wall Street, the S&P energy index was the biggest gainer among the 11 major sectors during much of the session but faded by the close, ending up 0.18 percent.

Trump tweeted that on Tuesday he would announce his decision on whether to withdraw from the Iran nuclear deal.

"Oil has done well in anticipation of the announcement from Trump. People are braced for the worst," said Keith Lerner, chief market strategist at SunTrust Advisory Services in Atlanta (BSE: ATLANTA.BO - news) .

The Dow Jones Industrial Average closed up 94.81 points, or 0.39 percent, at 24,357.32. The S&P 500 gained 9.21 points, or 0.35 percent, to 2,672.63 and the Nasdaq Composite added 55.60 points, or 0.77 percent, to 7,265.21.

Euro zone government bond yields slid as the unexpected fall in German industrial output was seen as encouraging the European Central Bank to prolong an unwinding of stimulus.

The yield on the benchmark 10-year German bund fell to 0.53 percent, while yields on U.S. benchmark 10-year Treasury notes rose slightly to 2.9516 percent.

Gold slipped, snapping three days of gains, as the U.S. dollar index strengthened.

U.S. gold futures for June delivery settled down 60 cents at $1,314.10 an ounce.

(Reporting by Herbert Lash in New York; Editing by Dan Grebler, James Dalgleish and Susan Thomas)