Global stocks peak as U.S. tax vote nears, dollar droops

By Laila Kearney

NEW YORK (Reuters) - Global stock markets rose to new highs on Monday as U.S. Republican lawmakers moved closer to passing tax-cut legislation, while the dollar slid on concerns about the bill's impact on economic growth and interest rates.

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 indices struck all-time highs by afternoon trading ahead of a potential vote.

The Dow Jones Industrial Average rose 129.39 points, or 0.52 percent, to 24,781.13, the S&P 500 gained 15.27 points, or 0.57 percent, to 2,691.08 and the Nasdaq Composite added 56.44 points, or 0.81 percent, to 6,993.02 having earlier risen above the 7,000 point mark for the first time.

The benchmark MSCI World index , which tracks stocks around the globe, gained 0.89 percent to a record high. The pan-European FTSEurofirst 300 index 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.

"The stocks that go up the most are the ones that benefit the most from tax cuts," said John Serrapere, director of research for Arrow Funds. Serrapere said retail and telecom companies are poised to benefit the most.

Meanwhile, the dollar index fell 0.34 percent after initially inching up following the tax plan's latest advancement.

U.S. currency traders began to speculate how impactful the pro-growth bill could be and whether it would accelerate expected interest rate increases by the U.S. Federal Reserve. The market currently sees two more rate increases in the coming year while the Fed itself anticipates three.

The euro was up 0.37 percent to $1.1795.

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 $1,261.51 an ounce. U.S. gold futures gained 0.58 percent to $1,264.80 an ounce.

The gap between U.S. shorter-dated and longer-dated Treasury yields contracted to its smallest in a decade on expectations the government would increase its short-term borrowing with the possible passage of the tax cut bill.

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 fell 0.49 percent to $57.02 per barrel and Brent was last at $63.22, down 0.02 percent on the day.

Bitcoin was down 1.6 percent to $18,651.84 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 Nick Zieminski and Daniel Bases)