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US and European equities rose to trade near record highs on Tuesday, and the euro tumbled on signals the European Central Bank may accelerate its 1 trillion euro bond-buying programme over the next two months.
The dollar gained 1.5% against the euro and was broadly ahead for a second day, while US Treasuries prices fell after data showed that US housing starts in April rose to the highest in nearly 7-1/2 years.
Oil prices slumped more than 3%, partly because of the dollar rally.
Wall Street's Dow Industrials index closed at an all-time high, though other major US stock indexes mostly eased in choppy trading, unsettled by disappointing Wal-Mart results and fears the housing data might encourage Federal Reserve policymakers to move sooner on interest-rate hikes.
"There really is a lot of fear about the threat of higher interest rates," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. "It's not an 'if' story. It's a 'when' story."
Wal-Mart's
The Dow Jones industrial average <.DJI> rose 13.51 points, or 0.07%, to end at a record 18,312.39.
The S&P hit a record intraday high of 2,133.02 before ending down 1.37 points, or 0.06%, at 2,127.83. The Nasdaq Composite <.IXIC> dropped 8.41 points, or 0.17%, to 5,070.03.
European markets shot up to near multi-year highs after senior ECB policymaker Benoit Coeure talked of adjusting the bank's bond-buying program.
He said the speed of the recent spike in bond yields was worrisome. It has effectively wiped out the benefits of quantitative easing, he said, and the ECB could "moderately" increase its buying in May and June, and possibly in September.
His comments pushed the euro > back below $1.12 for the first time in a week. The FTSEurofirst 300 ended up 1.7%. Gains of more than 2% on Germany's DAX and the CAC 40 in Paris outpaced a 0.38% rise on London's FTSE.
European bond yields tumbled, with benchmark 10-year German Bunds > down 4 basis points at 0.61% after going as low as 0.55%.
The dollar index was last up 1.15%, getting a lift against other major currencies from the US housing data. The euro > last traded off 1.5% at $1.1147.
Treasuries were also hurt by large offerings of corporate bonds, with yields on the 10-year note > last at 2.2797% on a price decline of 14/32.
Oil prices fell more than 3%, with US crude off for a fifth straight day, on the dollar's rally, as well as on evidence the United States and top oil exporter Saudi Arabia were pumping more than the world needed.
Brent
