Wall Street hits record highs, dollar gains vs. yen

By Sam Forgione

NEW YORK (Reuters) - U.S. and European shares rose on Tuesday, with Wall Street's three main stock indexes hitting record highs for a second straight day, on expectations that markets would benefit from U.S. President-elect Donald Trump's policies.

The Dow topped 19,000 points and the S&P 500 moved past 2,200 points for the first time ever, while the pan-European STOXX 600 index <.STOXX> and the FTSEurofirst 300 of top regional shares climbed to their highest levels since Nov. 10.

U.S. shares have rallied since the Nov. 8 U.S. election as Trump has promised tax cuts, higher spending on infrastructure and simpler regulations in the banking and healthcare industries.

A sharp rally in metals prices and mining stocks boosted European shares as the recent trend of a rotation to cyclical plays continued. The European Basic Resources index <.SXPP>, gained more than 3 percent after prices of major industrial metals such as copper and aluminum increased.

"Optimism is returning because of the potential that exists in the form of fiscal stimulus, infrastructure spending and tax cuts and is renewing confidence on the part of investors and consumers," said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.

MSCI's all-country world equity index <.MIWD00000PUS> rose 0.98 points or 0.24 percent, to 413.28.

The Dow Jones industrial average <.DJI> was last up 29.45 points, or 0.16 percent, at 18,986.14. The S&P 500 <.SPX> was up 1.27 points, or 0.06 percent, at 2,199.45. The Nasdaq Composite <.IXIC> was up 11.64 points, or 0.22 percent, at 5,380.50.

Europe's broad FTSEurofirst 300 index <.FTEU3> added 0.24 percent, at 1,345.66.

The dollar rose, helped by a surge in U.S. existing home sales last month that further cemented expectations not only of an interest rates hike in December, but also of further tightening next year. The dollar hit 111.35 yen , just below Monday's nearly 6-month high of 111.36 yen.

"The greenback should continue to benefit from mounting expectations for inflation and a potentially faster pace of Fed rate hikes," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

Oil prices were little changed after earlier rising to their highest levels this month, with U.S. crude touching $49.20 a barrel before dipping lower and benchmark Brent crude hitting $49.96. A growing consensus emerged in the market that OPEC would overcome internal disputes and strike a deal to reduce crude output.

Brent crude was last down 12 cents, or 0.25 percent, at $48.78 a barrel. U.S. crude was last down 41 cents, or 0.85 percent, at $47.83 per barrel.

U.S. Treasuries were relatively steady before the Treasury Department's auction of $34 billion in five-year notes, after two-year note yields earlier on Tuesday rose to a more than six-year high of 1.1070 percent .

New supply has weighed on shorter-dated debt at the same time as investors are increasingly nervous about impending interest rate hikes.

Gold edged lower on reduced appetite for safe-haven assets. Spot gold prices were last down $4.05, or 0.33 percent, at $1,209.61 an ounce.

(Additional reporting by Yashaswini Swamynathan in Bengaluru, Sabina Zawadzki in London and Karen Brettell and Gertrude Chavez-Dreyfuss in New York; Editing by Nick Zieminski)

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