Global stocks close higher as U.S. tax vote nears, dollar struggles

By Laila Kearney

NEW YORK (Reuters) - Wall Street and other major world stock markets hit fresh highs on Monday as U.S. Republican lawmakers moved closer to passing tax-cut legislation, while the dollar slid on scepticism about the bill's impact on economic growth.

Congress was expected to vote as early as Tuesday on the bill, which would become the biggest U.S. tax code overhaul in more than three decades if approved. President Donald Trump is aiming to sign the plan into law at the end of the week.

The plan would lower the corporate income tax rate to 21 percent from 35 percent, which analysts say would likely increase profits, buybacks and dividend payouts.

 

Wall Street's leading stock indexes closed at all-time highs ahead of a potential vote.

The Dow Jones Industrial Average <.DJI> rose 140.46 points, or 0.57 percent, to end at 24,792.2, the S&P 500 <.SPX> gained 14.35 points, or 0.54 percent, to 2,690.16 and the Nasdaq Composite <.IXIC> added 58.18 points, or 0.84 percent, to 6,994.76, after rising above 7,000 points for the first time.

The benchmark MSCI World index <.MIWD00000PUS>, which tracks stocks around the globe, gained 0.91 percent to a new high. The pan-European FTSEurofirst 300 index <.FTEU3> rose 1.18 percent.

A potential flurry of mergers and acquisitions, seen as another byproduct of the tax plan, also pushed stocks higher, analysts said.

Meanwhile, the dollar index <.DXY> fell 0.24 percent after inching up following the tax plan's latest advancement late last week.

U.S. currency traders began to doubt how impactful the pro-growth bill could be and grew skeptical about whether it would create enough growth to accelerate interest rate increases by the Federal Reserve. The market currently sees two more rate increases in the coming year while the U.S. central bank itself anticipates three.

"Even a passage of the bill by the year's end could have a limited impact on the dollar as investors are increasingly sceptical of the sustained positive impact the rushed bill will have on the economy," said Omer Esiner, chief market analyst at Commonwealth FX in Washington.

The euro >, benefiting from the dollar's slump, was up 0.25 percent to $1.1781.

The greenback's weakening propelled gold higher as the dollar-denominated bullion became cheaper for buyers using other currencies.

Spot gold > added 0.5 percent to $1,261.50 an ounce. U.S. gold futures gained 0.57 percent to $1,264.70.

The margin between U.S. shorter-dated and longer-dated Treasury yields widened on Monday from its slimmest in a decade as traders booked profits on curve-flattening positions tied to the view the Fed would raise rates further.

Oil prices rose amid an ongoing North Sea pipeline outage and as a strike by Nigerian oil workers threatened the country's crude exports.

Despite the respite for oil prices, growth in U.S. crude output continued to dampen the market and limit gains.

U.S. crude oil futures settled at $57.16 a barrel, down 14 cents or 0.24 percent. Brent crude futures settled at $63.41, up 18 cents or 0.28 percent.

Bitcoin > was down 1.3 percent to $18,712.80 on the Bitstamp exchange after rising to a record of $19,666 over the weekend, ahead of CME Group Inc's launch of bitcoin futures on Sunday.

(Additional reporting by Alasdair Pal in London; Editing by Daniel Bases and James Dalgleish)