By Rodrigo Campos
NEW YORK (Reuters) - The blue-chip Dow Jones index extended its record-breaking run on Wednesday and world stock markets edged higher led by strong gains in Asia, while the euro slid against the dollar a day before a European Central Bank meeting.
U.S. data showing a steady manufacturing sector and surprisingly strong gains in private employment supported equity markets. Stocks, despite record highs, are still at attractive valuations, analysts said.
The U.S. dollar extended gains against the euro and the yen.
Bets that the ECB at its policy meeting on Thursday could signal future interest-rate cuts pressured the euro. The Bank of Japan will begin a two-day meeting on Thursday, but it is expected to hold its fire this week.
The market is turning its attention to the BoJ's April 3-4 meeting, the first policy review under its new governor, Haruhiko Kuroda, who is an advocate of aggressive monetary easing.
In late afternoon trading on Wall Street, the Dow Jones industrial average rose 57.83 points or 0.41 percent, to 14,311.6, the S&P 500 gained 3.62 points or 0.24 percent, to 1,543.41 and the Nasdaq Composite added 0.47 points or 0.01 percent, to 3,224.6.
The Dow hit a record intraday high and the broader S&P 500 was 1.5 percent away from its all-time closing record.
"I'm surprised at the speed of the gains," said Jim McDonald, chief investment strategist at Chicago-based Northern Trust Global Investments. "But stocks are still not expensive, and we can expect to continue getting a reasonable advance from here."
The S&P 500 index is trading at 13.6 times estimated 12-month earnings, compared with around 14.9 times in October 2007, when the index hit the record high that was finally eclipsed on Tuesday, according to Thomson Reuters data. The price/earnings multiple suggests that stocks are still about 9 percent cheaper than they were at the 2007 peak.
The MSCI world index rose 0.2 percent.
The pan-European ESTOXX 50 slipped 0.1 percent, and the FTSEurofirst 300 fell 0.3 percent.
Overnight in Asia, the Nikkei hit its highest in 4-1/2 years, helped by Tuesday's record high close on Wall Street and prospects of a reflationary policy in Japan to revive growth.
EURO, TREASURIES WEAKEN
The better-than-expected U.S. private-sector jobs figures reported by payrolls processor ADP on Wednesday dented the allure of Treasuries. The figures comes two days ahead of the government's closely watched monthly payrolls report.
The benchmark 10-year U.S. Treasury note was down 13/32, the yield at a seven-day high of 1.9409 percent.
"We had ADP employment data today which surprised to the upside and that helped take (yields) higher," said Jake Lowery, Treasury trader at ING Investment Management in Atlanta.
"We have got supply coming next week, right around the corner after payrolls, and it seems that with Treasuries trading in a pretty tight range lately, more and more market participants are focusing on small opportunities around the supply calendar."
The U.S. Treasury is set to auction three-year and 10-year notes next week, along with 30-year bonds.
The euro fell against the U.S. dollar ahead of the ECB meeting.
"The market has turned dovish on the ECB and that kept the euro constrained," said Vassili Serebriakov, currency strategist at BNP Paribas in New York. "While most are expecting the ECB to keep rates steady, there are a few calls for a rate cut tomorrow, including our bank."
The euro was down 0.45 percent against the greenback at $1.2991.
The dollar also strengthened against the Japanese currency, hitting a one-week high above 94 yen.
Copper slumped after a two-day rebound, weighed by uncertainty about metals demand in China, the world's top consumer, and economic growth in Europe.
Three-month copper fell 0.85 percent to $7,706 a ton, erasing initial gains that took it above $7,812.
Areas of concern for the global economy remain, including the Chinese government's move to cool the country's overheated property market, the possible economic impact of U.S. spending cuts and political deadlock in Italy.
Brent oil pared losses to fall 0.5 percent, near $111 a barrel, while U.S. crude briefly slipped below $90, before settling down 0.4 percent at $90.43.
U.S. crude oil inventories rose more than forecast last week while distillates stocks fell more than expected as refinery utilization rates posted a surprise drop, data from the Energy Information Administration showed on Wednesday.
Gold rose in late trading on expectations central banks would maintain loose monetary policy, but still in the tight range the price has kept in recent sessions.
Spot gold was up 0.4 percent $1,581.51 an ounce.
(Additional reporting by Luciana Lopez, Leah Schnurr, Angela Moon and Nick Olivari; editing by Dan Grebler and Leslie Adler)
