NEW YORK (Reuters) - The dollar fell on Wednesday after disappointing U.S. home sales data, but global equity markets edged higher on hopes for more stimulus from the European Central Bank and the prospect that stocks may be a better investment than other alternatives.
The Dow and S&P 500 set all-time closing highs.
The less-than robust data fed worries the U.S. economy might be losing momentum. Also feeding that concern was data showing U.S. consumer spending rose modestly in October while a key measure of business spending plans fell for a second straight month.
"With the global backdrop being so weak, the onus is on the U.S. data to be very strong," said Chris McReynolds, head of U.S. Treasury trading at Barclays in New York.
Sales of new U.S. single-family homes rose for a third straight month last month, but a downward revision to September's pace of sales suggested the housing market's recovery would remain gradual.
The Commerce Department said sales gained 0.7 percent to a seasonally adjusted annual rate of 458,000 units. Economists polled by Reuters had forecast a 472,000-unit pace last month.
The slightly weaker data isn't enough to derail the rally in U.S. stocks, said Matthew Keator, partner in the Keator Group, a wealth management firm in Lenox, Massachusetts.
"While markets are fairly valued, when you consider the alternatives equities are still the best asset," Keator said.
The dollar index, a measure of the greenback's value against a basket of six currencies, fell to a session low of 87.520 before retracing to 87.637, down 0.32 percent.
The euro rose 0.28 percent against the dollar, to $1.2509. Against the yen, the dollar fell 0.2 percent, to 117.73 yen.
MSCI's all-country world equity index rose 0.27 percent to 427.89 points, and the pan-European FTSEurofirst index closed 0.02 percent higher at 1,389.18.
Germany's blue chip DAX index advanced for a 10th session in a row, as investors bet on further ECB stimulus. The DAX ended 0.6 percent higher, enjoying its longest winning streak since May 2013.
The Dow Jones industrial average closed up 12.81 points, or 0.07 percent, to 17,827.75. The S&P 500 rose 5.80 points, or 0.28 percent, to 2,072.83, and the Nasdaq Composite added 29.07 points, or 0.61 percent, to 4,787.32.
Benchmark U.S. Treasury yields fell to their lowest levels in over a month, while long-dated yields also hit more one-month lows on the weaker-than-expected U.S. economic data and continued low yields in Europe.
The benchmark U.S. Treasury 10-year note rose 4/32 in price to yield 2.2464 percent.
The yield on German 10-year bunds fell to 0.73 percent, just above a trough of 0.716 percent hit in mid-October.
Oil prices fell on increased signals from OPEC that it would hold off making any major production cuts this week.
Benchmark Brent futures fell 58 cents to settle at $77.75 a barrel. U.S. crude settled down 40 cents at $73.69 a barrel. [O/R]
Reporting by Herbert Lash; Additional reporting by Francesco Canepa and Patrick Graham; Editing by Leslie Adler and Cynthia Osterman