* Dollar climbs amid talk of Fed rate hike
* Financials, tech shares boost stocks
* Oil rises; gold hits lowest in more than 4 weeks
(Adds U.S. stocks' close)
By Caroline Valetkevitch
NEW YORK, May 24 (Reuters) - The dollar hit is highest
against the euro in nearly 10 weeks on Tuesday, while U.S. bond
prices dipped as expectations grew that the Federal Reserve
could raise interest rates soon.
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.
Last week, the Fed surprised investors when the central
bank's meeting minutes opened the door to a rate hike as early
as June.
World stock indexes rallied, led by shares of financial
companies, which benefit from rising interest rates, as well as
technology and other growth-oriented sectors.
The euro was down 0.7 percent against the dollar at $1.1136
and hit its lowest level since March 16. 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 Corp
in New York. "Markets will wax and wane, but generally speaking,
the thrust will be toward dollar gains."
The Dow Jones industrial average .DJI closed up 213.12
points, or 1.22 percent, to 17,706.05, the S&P 500 .SPX gained
28.02 points, or 1.37 percent, to 2,076.06 and the Nasdaq
Composite .IXIC added 95.27 points, or 2 percent, to 4,861.06.
MSCI's all-country world stock index .MIWD00000PUS rose 1
percent, while the pan-European FTSEurofirst 300 index .FTEU3
of leading regional stocks ended up 2.3 percent.
While higher borrowing costs can be a negative for the stock
market, equity investors may be hopeful about prospects for the
broader U.S. economy.
"The market is starting to contemplate the idea that Fed
rate hikes this year are A: more likely, and B: not inherently
bad in and of themselves," said Bill Merz, an investment
strategist with U.S. Bank Wealth Management.
In the U.S. Treasury market, the rally in stocks and robust
new home sales data weighed on bond prices. The two-year yield
touched two-month highs, but prices bounced off session lows
after robust demand at a $26 billion note auction.
Benchmark 10-year Treasury notes US10YT=RR were down 5/32
in price for a yield of 1.859 percent, up 2 basis points from
Monday.
Investors will watch Fed Chair Janet Yellen's appearance at
a panel at Harvard University on Friday, the same day as they
take in a revised estimate of U.S. first-quarter growth.
Oil prices gained as investors anticipated a weekly drawdown
in U.S. crude inventories that they hoped would boost prices
closer to $50 a barrel.
Brent futures LCOc1 finished up 0.5 percent at $48.61,
ending a four-day slide, while U.S. crude futures CLc1 rose
1.1 percent to settle at $48.62 a barrel.
The strong dollar took a toll on gold, which fell to its
lowest in more than four weeks. Spot gold XAU= was down 1.5
percent at $1,229.25 an ounce, off an earlier low of $1,227.70.
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