US STOCKS-Wall St rallies on China stimulus, earnings

* Hasbro (NasdaqGS: HAS - news) reports surprise revenue rise, shares jump

* Royal Caribbean falls as strong USD hurts onboard spending

* Indexes up: Dow 1.4 pct, S&P 1 pct, Nasdaq 1.2 pct (Updates to midday)

By Rodrigo Campos

NEW YORK, April 20 (Reuters) - U.S. stocks rose on Monday, reversing much of the previous session's sharp decline, as China's steps to stimulate its slowing economy and as earnings lured money back into equities.

In the second industry-wide cut in two months, China's central bank on Sunday reduced the amount of cash that banks must hold as reserves in a move to help spur bank lending and combat slowing growth.

"China was part of a two-pronged news event that caused part of the selloff on Friday. The move over the weekend changed that perspective and caused a little bit of a boost today," said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin.

Morgan Stanley (Xetra: 885836 - news) shares rose 1.2 percent to $37.19 after the Wall Street investment bank reported a 60 percent rise in quarterly profit and raised its dividend by 50 percent to 15 cents per share.

Hasbro jumped 9.5 percent to $72.16 after the toymaker reported a surprise increase in revenue. Royal Caribbean fell 7.8 percent to $72.85 after it reported a fall in revenue, saying a strong dollar hurt onboard spending by customers from outside the United States.

At 11:30 a.m. EDT (1530 GMT) the Dow Jones industrial average rose 241.7 points, or 1.36 percent, to 18,068, the S&P 500 gained 21.39 points, or 1.03 percent, to 2,102.57 and the Nasdaq Composite added 59.37 points, or 1.2 percent, to 4,991.19.

Nearly 76 percent of the S&P 500 components that have reported earnings beat analyst expectations, topping the 70 percent average in the last four quarters. However, just 47 percent beat on revenue, compared to the 58 percent average top line beat over the last year.

"The bar got lowered a lot for energy companies and those better involved in exports (and) that pulled the bar down for everybody else," said Schwab's Frederick. "My expectation was that companies that are not part of those two categories may very well show some upside surprises, and I think that's what we've seen so far."

Despite lackluster U.S. economic data, a world grappling with slow growth, and concern that Greece and Ukraine could default on their debt, the U.S. stock market has been more than resilient - making it hard for short sellers. Major indices are less than two percent below record highs.

Advancing issues outnumbered declining ones on the NYSE by 2,291 to 621, for a 3.69-to-1 ratio on the upside; on the Nasdaq, 1,864 issues rose and 767 fell for a 2.43-to-1 ratio favoring advancers.

The S&P 500 was posting 2 new 52-week highs and 1 new low; the Nasdaq Composite was recording 37 new highs and 43 new lows.

(Reporting by Rodrigo Campos; Editing by Chizu Nomiyama and Nick Zieminski)