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By Caroline Valetkevitch
NEW YORK (Reuters) - The U. S. dollar slumped to a more than three-year low against the euro on Friday, extending recent losses on expectations European Central Bank policymakers are preparing to reduce their stimulus, while a key global stock index was on track for an eighth week of gains.
The euro's rise weighed on the dollar index <. DXY>, which measures the greenback against six rival currencies. The index was down 0.94 percent, after slipping to a four-month low of 90.954.
The dollar index was down 1.23 percent for the year, its worst performance over the first nine trading days since 2010, according to Reuters data.
U. S. stock indexes hit all-time highs, along with the MSCI world index. Strong U.
S December retail sales data also helped stocks.
The S&P financial index <. SPSY> was up 0.6 percent. While tax-related costs are expected to weigh on banks' earnings, they are expected to benefit in the long run from a lower tax burden.
"The fact all the big money centre banks beat on the bottom line is a good omen for the rest of the earnings season," said William Lynch, director of investments at Hinsdale Associates, in Hinsdale, Illinois.
The Dow Jones Industrial Average <. DJI> rose 185.41 points, or 0.72 percent, to 25,760.14, the S&P 500 <. SPX> gained 15.39 points, or 0.56 percent, to 2,782.95 and the Nasdaq Composite <. IXIC> added 40.17 points, or 0.56 percent, to 7,251.95.
The pan-European FTSEurofirst 300 index <. FTEU3> rose 0.23 percent and MSCI's gauge of stocks across the globe <. MIWD00000PUS> gained 0.72 percent.
A robust U. S. inflation report boosted Treasury yields.
The two-year yield
In commodities, oil prices rose for a sixth day after Russia's oil minister said that global crude supplies were "not balanced yet," alleviating market concerns about a wind-down of the OPEC-led deal to reduce production.