U.S. dollar hits five-year highs, world stocks advance

By Herbert Lash

NEW YORK (Reuters) - Global equity markets rose and the dollar climbed to its highest since 2009 on Wednesday as momentum grew for the European Central Bank to launch a bond-buying program and data showed U.S. economic resiliency in the face of slowing world growth.

U.S. Treasuries prices steadied after two days of losses as bond traders awaited a possible ECB shift in monetary policy on Thursday and a key report on American unemployment on Friday.

Most euro zone bond yields headed toward record lows, with Italian 10-year yields falling below 2 percent for the first time. The ECB is under pressure to do more to boost growth and fend off deflation as oil prices slump and business activity in the bloc grew less than expected in November.

The euro skidded to a 27-month trough against the dollar, which also hit a seven-year peak against the yen. The greenback got a boost as Federal Reserve officials made upbeat comments about the U.S. economy, feeding expectations for a U.S. interest rate hike in mid-2015.

"Investors are looking to increase their holdings of the dollar and decrease the euro because they're anticipating further lower price action on the euro on the basis of ... further easing and stimulus from the ECB," said Neil Jones, head of hedge fund FX sales at Mizuho Bank in London.

The dollar rose to its highest level since March 2009 against a basket of major currencies at 89.005.

The euro last traded near $1.2307, down 0.6 percent on the day. During the session, it fell as low as $1.2301, its weakest since August 2012.

Against the yen, the dollar rose 0.49 percent to 119.77.

European stocks rose, led by Greece, Italy and Spain, as investors bet the ECB would signal further economic stimulus. MSCI's all-country world stock index rose 0.09 percent, while the FTSEurofirst 300 index of top European shares closed up 0.54 percent at 1,399.97 points.

U.S. stocks edged higher, led by commodity-related shares, as data continued to show a strengthening U.S. economy. The U.S. private sector created 208,000 jobs last month, fewer than expected but suggesting a slowing global economy was having limited domestic impact.

The Dow Jones industrial average rose 17.25 points, or 0.1 percent, to 17,896.8. The S&P 500 gained 5.53 points, or 0.27 percent, to 2,072.08 and the Nasdaq Composite added 17.79 points, or 0.37 percent, to 4,773.60.

The benchmark 10-year Treasury was flat in price, yielding 2.2852 percent.

Brent oil fell below $70 a barrel in choppy trading as the market searched for a price floor after a near 40-percent fall since June, and as U.S. crude stocks declined last week.

Brent for delivery in January settled down 62 cents at $69.92 a barrel after falling by $2 on Tuesday on a deal between Baghdad and its Kurdish region over oil sales.

U.S. crude for January delivery rose 50 cents to settle at $67.38 a barrel.

(Reporting by Herbert Lash; Editing by Nick Zieminski)