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(Recasts to reflect curve rally, updates prices throughout)
FRANKFURT, July 6 (Reuters) - Germany's 2018 baseload power contract, the European benchmark, rose 1.5 percent to 31.70 euros ($36.09) a megawatt-hour (MWh) on Thursday, its highest level in two years, thanks to buying interest spurred by increases in coal prices.
* Traders said if a related carbon rally continued, and gas prices climbed too, power prices could spiral higher but they were undecided about the likelihood of such an outcome.
* "I am in two minds whether the rally will continue because there are not enough fundamental reasons, but then that's never stopped speculators," said one trader.
* German Cal '18 for next year-delivery was at its highest since late July 2015.
* The equivalent French year-ahead contract rose 0.5 percent to 37.3 euros/MWh.
* Coal cif North Europe rose 0.6 percent to $72.35 per tonne, its highest since November 2016.
* Chinese imports have helped global coal prices add some $4-5 a tonne in recent trading sessions.
* Coal accounts for more than 40 percent of German power generation.
* Carbon pollution rights, which electricity generators must hold to offset their carbon emissions, jumped 3.6 percent to 5.22 euros a tonne.
* The German continuous year-ahead power contract on the EEX power bourse was at 31.75 euros, its highest so far in 2017.
* But it was well below the last trading result of the 2017 contract, which was above 34 euros on Dec. 28, 2016.
* Prompt power prices fell on Thursday as Germany was expected to see wind power production surge on Friday while French nuclear reactors returned from outages, boosting supply at a time of weakening pre-weekend demand.
* The German baseload contract for Friday was down 8.2 percent at 37.4 euros/MWh.
* The equivalent French price fell 14.5 percent to 41.9 euros/MWh.
* Electricity production from German wind turbines is predicted to rise to 4.7 gigawatts (GW) on Friday from 1 GW expected on Thursday, Thomson Reuters data showed.
* German demand is expected to fall 900 MW to 61 GW and rise 100 MW in France to 48.7 GW day-on-day as higher temperatures increase the use of air conditioners.
* The amount of French nuclear capacity available increased by nearly 5 percentage points to 66.8 percent overnight as utility EDF restarted power stations. ($1 = 0.8770 euros) (Reporting by Vera Eckert; editing by David Clarke)