GLOBAL MARKETS-U.S. stocks extend rally, dollar touches 11-year high

* Wall Street firms after February rally, Nasdaq hits 5,000

* China rate cut lifts Asia equities, gold

* Dollar index eases after touching 11-year peak

* Spanish, Italian yields fall to record lows before ECB QE (Updates with U.S. market action; changes dateline; previous LONDON)

By Richard Leong

NEW YORK, March 2 (Reuters) – U.S. stock prices rose on Monday, with the Nasdaq composite touching the 5,000-point mark for the first time in 15 years, while the dollar hit an 11-year high on expectations the Federal Reserve might raise interest rates later this year.

Wall Street kicked off March on a high note after a stellar February, when the benchmark S&P 500 Index registered its best monthly gain since October 2011.

“After a strong February, you are seeing some money moving into the stock market at the start of the month,” said Lou Brien, market strategist at DRW Trading in Chicago.

Asian stocks ended higher after China cut interest rates over the weekend, but European equities slipped from seven-year highs hit on merger activity in the telecom sector.

China, which posted its slowest growth in decades in 2014, on Saturday cut its benchmark lending and deposit rates.

Brent crude futures fell more than 2 percent in London to about $ 61 a barrel after Iran said a deal on its nuclear program could be reached this week if the West lifts sanctions, which could boost the country’s oil exports.

Gold steadied as investors cashed in gains after upbeat Asian demand earlier lifted the metal to two-week highs.

Expectations the U.S. central bank might end its near-zero interest rate policy as early as this summer remained despite some data suggesting the world’s biggest economy was losing some momentum in early 2015.

In early trading, the Dow Jones industrial average was up 112.58 points, or 0.62 percent, at 18,245.28. The Standard & Poor’s 500 Index was up 7.27 points, or 0.35 percent, at 2,111.77. The Nasdaq Composite Index was up 29.46 points, or 0.59 percent, at 4,992.98.

The pan-European FTSEurofirst 300 stocks index edged up at the open but lost steam and was last down 0.4 percent. A 5 percent fall in Vivendi shares and a 7 percent drop in Greek banks pressured the market and outweighed any beneficial impact of broadly upbeat euro zone data.

Tokyo’s Nikkei ended up 0.15 percent.

Against a basket of currencies, the dollar climbed to its strongest level since September 2003 before retreating. It was last up 0.09 percent.

The greenback was up 0.3 percent at 120.115 yen, while the euro was flat against the dollar at $ 1.1199.

In the bond market, Spanish, Italian and Portuguese yields fell to record lows as investors looked forward to the start of the European Central Bank’s quantitative easing program later this month. ECB policymakers meet in Cyprus on Wednesday and Thursday.

Yields on less risky 10-year U.S. and German government debt rose to 2.057 percent and 0.340 percent, respectively.

Brent crude for April delivery was last down $ 1.22, or down 1.9 percent, at $ 61.36 a barrel. U.S. crude was last up $ 1.12, or 2.25 percent, at $ 50.88 per barrel.

Spot gold prices fell $ 3.90 to $ 1,208.65 an ounce.

(Additional reporting by Nigel Stephenson, Atul Prakash and Patrick Graham in London, Shinichi Saoshiro in Tokyo, Lidia Kelly and Vladimir Abramov in Moscow; Editing by Kevin Liffey and Dan Grebler)