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MARKETS GLOBAL-Shares rally, Wall Street hits record high; oil gains

* S&P 500 sets intraday record in broad U.S. equity rally; German sentiment helps

* Oil gains on G20 global growth outlook, data shows rising U.S. demand

* Dollar trades near break-even against euro, Japanese yen

NEW YORK, Feb 24 (Reuters) - Stocks on Wall Street surged to an all-time high on Monday on optimism over merger activity that also lifted global equity markets, while crude oil prices rose, helped by expectations of revived growth in the demand for oil.

U.S. stocks advanced in a broad rally, pushing the benchmark S&P 500 to an intra-day record as the Nasdaq punched to a new high for 2014 at levels last seen almost 14 years ago, when the technology bubble imploded.

But U.S. stocks pared gains late in the session, ending the day just shy of a closing high set in January.

A surprise improvement in German business morale added to optimism over the euro zone's recovery and helped lift European shares. An one-notch increase in Spain's sovereign debt rating by Moody's Investors Service Inc also helped stocks in Europe.

Recent U.S. economic data that came in below expectations had fueled concern that stocks were over-valued. But a string of merger and acquisition activity offset that outlook.

Radio frequency chipmaker RF Micro Devices Inc agreed to buy peer TriQuint Semiconductor Inc for about $1.6 billion, and Men's Wearhouse Inc raised its offer for Jos. A. Bank Clothiers Inc by more than 10 percent.

Billionaire investor Carl Icahn's renewed call for the spinoff of eBay Inc's fast-growing PayPal division added to the merger frenzy.

"The M&A news still seems to be moving forward between the RF Micro deal, the Jos. A Bank deal and Carl Icahn's pushing on eBay," said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey.

"For some investors that suggests the markets may not be over-valued if it allows for this kind of activity," he said.

Shares of RF climbed 21 percent to $7.03, while TriQuint gained 26.1 percent to $11.64. Men's Wearhouse rose 7.5 percent to $48.51, while Jos. A. Bank added 9.1 percent at $60.04.

Shares of eBay rose 3.1 percent to $56.30.

Reduced tensions in Ukraine, where authorities issued an arrest warrant for mass murder against ousted President Viktor Yanukovich, also boosted sentiment, Meckler said.

MSCI's all-country equity index rose 0.47 percent, but its index for emerging markets fell 0.1 percent as plunging property stocks took a toll on China's markets.

"People are recognizing that while some economic data has been muted, there is still a lot of value in the market based on corporate cash positions and multiples," said Matthew Keator, a partner at the Keator Group, a wealth management firm in Lenox, Massachusetts.

"From a perspective of overall fundamentals, things look pretty good, especially relative to other asset classes," he said.

On Wall Street, the Dow Jones industrial average closed up 103.84 points, or 0.64 percent, at 16,207.14. The Standard & Poor's 500 Index was up 11.36 points, or 0.62 percent, at 1,847.61. The Nasdaq Composite Index was up 29.56 points, or 0.69 percent, at 4,292.97.

In Europe, the FTSEurofirst 300 index of top regional shares closed up 0.64 percent at 1,351.65.

German business morale rose in February to its highest since July 2011, Munich-based Ifo think tank's business climate index showed. The data suggested Europe's largest economy will grow at a faster pace in the first quarter after expanding only modestly last year.

European stocks have risen sharply over the past 2-1/2 weeks, boosted by hopes the region's economic growth and corporate profits will recover this year.

German Bund futures fell to the day's low on the German sentiment indicator. The Bund traded down 19 ticks to settle at 143.68.

U.S. Treasuries prices fell as worries dwindled about troubled developing economies such as Ukraine.

The benchmark 10-year note fell 3/32 in price to yield 2.7445 percent.

Brent crude oil rose above $110 a barrel on news of further supply losses in Africa and expectations of revived oil demand growth, while gains in U.S. oil prices were buoyed by upbeat economic data that fueled hopes for demand growth.

Oil markets found support from a fairly upbeat meeting of Group of 20 officials from the world's top economies in Sydney, who announced a target of generating more than $2 trillion in additional output over five years.

Preliminary estimates for weekly data show a drop of more than 1 million barrels at Cushing, Oklahoma, a delivery point against the New York Mercantile Exchange oil futures contract, according to traders and brokers who cited energy intelligence group Genscape.

Brent crude rose 79 cents to settle at $110.64 a barrel. U.S. oil settled up 62 cents at $102.82 a barrel.

Gold rose to a near four-month high, adding to last week's gains, as investors grew more anxious about the pace of the U.S. economic recovery and China's growth.

U.S. gold futures for April delivery settled up $14.40 an ounce at $1,338.

Major foreign exchange rates for the dollar traded mostly flat.

The euro traded near break-even against the dollar, falling 0.04 percent at 1.3732.

The dollar index fell 0.03 percent to 80.212, while against the yen, the dollar was 0.08 percent lower at 102.44.

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