* T-Bill yields edge back up * Gold on course for third week of gains * Reflation trade in question as COVID-19 cases rise (Updates with U.S. opening) LONDON/NEW YORK, July 9 (Reuters) - U.S. stocks moved higher on Friday, following gains in equities in Europe, while Treasury yields rose and the dollar held firm as markets took a cautious breather amid fresh concerns about the pace of economic recovery from COVID-19. Markets have been roiled this week as a rise in cases of the delta coronavirus variant reduced risk appetite and prompted a flight to safety, with some betting the post-pandemic reflation trade had stalled and secular stagnation was back on the agenda. The Dow Jones Industrial Average rose 324.99 points, or 0.94 percent, to 34,746.92 at the start of U.S. trading. The broad S&P 500 gained 21.33 points, or 0.49 percent, to 4,342.15, while the tech-laden Nasdaq Composite added 34.64 points, or 0.24 percent, to 14,594.42. “There seems to be the gradual realization for many that the vaccination programs alone won’t prove enough to get economies back to their pre-COVID normality, with cases at the global level now ticking up again as the more infectious Delta variant spreads across the world,” said Deutsche Bank analyst Jim Reid. Weighed against that is the ultra-easy monetary policy from many major central banks, although some fear this could yet be curtailed if inflation picks up. On Friday, data from China showed new bank loans rose more than expected in June, while broad credit growth also picked up. China’s central bank also announced a new cut in the cash banks must hold in reserve, trying to shore up growth. The STOXX Europe 600 index was up 0.8%, recovering about half of the prior session’s decline, but still on course to record the second straight week of losses. Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan had briefly touched two-month lows before paring losses to trade down 0.1%. U.S. stock futures pointed to a higher open on Wall Street, up 0.3%. Federal Reserve Bank of San Francisco President Mary Daly told the Financial Times that low vaccination rates in some parts of the world posed a threat to U.S. growth. After dipping sharply over the early part of the week, yields on 10-year Treasury notes were on Friday up around 6.3 basis points to 1.351%, off the 4-1/2 month low of 1.25% hit on Thursday. In Europe, safe-haven German Bund yields ticked higher but were still eyeing the biggest two-week drop since March 2020 as investors eyed a likely longer road to economic recovery. In currencies, the safe haven yen was up 0.26%, at $110.0800, heading for its biggest weekly rise since November. The euro was last up 0.19 percent, at $1.1864. That left the dollar index, which tracks the greenback versus a basket of other major currencies, hovering around flat, last down 0.2% at 92.213. “The most important issue to consider is the current drop in yields globally, and what this downward trend implies in terms of risk aversion and trade repositioning,” Thomas Flury, Head of FX Strategies at UBS Global Wealth Management, wrote in a note. “So far, we think markets are trapped in some momentum trades, which have little persistence.” Gold, another safe-haven asset, was on track for its third straight weekly gain. It was last up 0.1% at $1,804 an ounce. Oil prices added to overnight gains as U.S inventories declined, but remain on course for a weekly loss. Brent crude was up 67 cents to $74.79 a barrel. U.S. crude added 79 cents to $73.73 per barrel. Additional reporting by Abhinav Ramnarayan, Swati Pandey and Sujata Rao; Editing by Shri Navaratnam, Giles Elgood, Timothy Heritage, William Maclean Our Standards: The Thomson Reuters Trust Principles.