U.S. dollar hits five-year highs, stocks rally

Wed Dec 3, 2014 4:33pm EST
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By Herbert Lash

NEW YORK (Reuters) - Global equity markets rose and the dollar climbed to its highest since 2009 on Wednesday as momentum grew for the European Central Bank to launch a bond-buying program and data showed U.S. economic resiliency in the face of slowing world growth.

The Dow industrials and benchmark S&P 500 set fresh record closing and intra-day highs on Wall Street.

U.S. Treasuries prices steadied after two days of losses as bond traders awaited a possible ECB shift in monetary policy on Thursday and a key report on American unemployment on Friday.

Most euro zone bond yields headed toward record lows, with Italian 10-year yields falling below 2 percent for the first time. The ECB is under pressure to do more to boost growth and fend off deflation as oil prices slump and business activity in the bloc grew less than expected in November.

The euro skidded to a 27-month trough against the dollar, which also hit a seven-year peak against the yen. The greenback got a boost as Federal Reserve officials made upbeat comments about the U.S. economy, feeding expectations for a U.S. interest rate hike in mid-2015.

"We're looking for any stimulus, and are vulnerable to no additional actions being taken," said Joseph Quinlan, chief market strategist at U.S. Trust, Bank of America Private Wealth Management in New York. "We'll feel more confident about global prospects if we have a more proactive ECB," he said.

The dollar rose to its highest level since March 2009 against a basket of major currencies at 89.005 .DXY, and last traded at 88.961, up 0.35 percent for the session.

The euro fell 0.59 percent to $1.2309, just off the day's low of $1.2301 EUR=D4, its weakest since August 2012.   Continued...

A man is reflected on an electronic stock quotation board outside a brokerage in Tokyo, November 17, 2014. REUTERS/Issei Kato