* Dollar gains amid talk of Fed rate hike
* Stocks jump, helped by financials
* Oil reverses earlier losses
(Updates with U.S. market openings, changes dateline, previous
LONDON)
By Caroline Valetkevitch
NEW YORK, May 24 (Reuters) - The dollar hit an 8-week high
against the euro on Tuesday as expectations grew that the U.S.
Federal Reserve could raise interest rates sooner than later,
while world stock indexes rallied with financial and tech
shares.
Surprisingly strong data on U.S. new home sales in April
supported the view the economy may be strong enough for the Fed
to raise interest rates as early as June, pushing U.S. Treasury
prices to session lows.
Last week, the Fed surprised investors when the central
bank's meeting minutes opened the door to a rate hike as early
as in June.
The euro was last down 0.5 percent against the European
single currency at $1.1157 EUR= .
"A re-pricing of Fed tightening expectations is the
principal driver of the U.S. dollar's resurgence," said Richard
Franulovich, senior currency strategist at Westpac Banking
Corporation in New York. "Markets will wax and wane, but
generally speaking, the thrust will be toward dollar gains."
On Wall Street, financial shares, which benefit from rising
interest rates, led gains in the S&P 500 along with technology
shares, though all sectors were higher.
The Dow Jones industrial average .DJI was up 202.03
points, or 1.15 percent, to 17,694.96, the S&P 500 .SPX had
gained 24.78 points, or 1.21 percent, to 2,072.82 and the Nasdaq
Composite .IXIC had added 75.95 points, or 1.59 percent, to
4,841.74.
Some investors worry, though, that tightening borrowing
costs could hamper economic expansion and reduce liquidity in
stock markets, which could limit stock gains.
MSCI's all-country world stock index .MIWD00000PUS was up
0.9 percent and on track to snap four straight days of losses.
The pan-European FTSEurofirst 300 index .FTEU3 of leading
regional stocks jumped 2.2 percent.
Financial shares also rallied in Europe. Sentiment was
underpinned by comments from European Central Bank supervisory
chief Daniele Nouy, who said the bank was working on new
proposals for non-performing loans that remain one of the
biggest problems for the region's economy.
In the Treasury market, benchmark 10-year Treasury notes
US10YT=RR were last 7/32 lower in price for a yield of 1.866
percent, up about 3 basis points from late on Monday.
Investors are also watching for Fed Chair Janet Yellen's
appearance at a panel at Harvard University on Friday, a day on
which investors will also see the revised estimate of U.S.
first-quarter growth.
Oil prices gained as investors awaited crude oil inventory
data from the United States that was expected to show a
shrinking supply overhang.
Brent futures LCOc1 was up 61 cents at $48.96 a barrel,
while U.S. crude futures CLc1 rose 71 cents to $48.79.
The strong dollar took a toll on gold, which fell to a
four-week low. Spot gold XAU= was down 0.9 percent at
$1,236.81 an ounce at 1340 GMT, off an earlier low of $1,235.35.
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