By Herbert Lash

NEW YORK, Jul 19 (Reuters) – Global stocks and the dollar rose on Wednesday after an unexpected cooldown in UK inflation reinforced risk-averse sentiment across markets, anticipating the US Federal Reserve to raise interest rates one last time next week.

* The dollar rebounded after UK inflation slowed more than expected in June to its slowest pace in over a year at 7.9%. These data led to a strong collapse of the pound sterling against major currencies.

* The euro was up 0.398% and it was down 0.3% at $1.1192.

* Dollar prices hovered around an eight-week hit on Tuesday and the dollar is improving on expectations that the Fed will end its most aggressive rate hikes in more than four decades when it concludes its two-day meeting on July 26.

* Wall Street’s main indexes rose about 0.3% as investors shrugged off Goldman Sachs (NYSE:)’s poor second quarter performance and enjoyed strong earnings from smaller banks. The KBW banking index rose 1.8%, its third straight day of gains.

* “One has to conclude that global growth is healthy. It is certainly not slowing down and that in itself is a surprise and a good sign for future earnings. In addition, interest rates appear to have peaked due to inflation,” said Brad Conger, deputy chief investment officer at Hirtle Callaghan & Co, in Conshohocken, Pennsylvania.

* The pan-European index rose 0.37% and MSCI’s global share gauge rose 0.17%.

* The two-year US Treasuries yield, which tends to move in line with interest rate expectations, fell 0.6 basis point to 4.747%. The benchmark 10-year note fell 1.5 basis points to 3.774%.

* Crude oil prices increased by more than 0.5%.

(Additional reporting by Naomi Rovnick in London and Tom Westbrook in Sydney; Spanish editing by Ricardo Figueroa and Carlos Serrano)