U.S. tax plan hopes boost stocks, dollar

By Chuck Mikolajczak

NEW YORK (Reuters) - World stocks climbed, along with the U.S. dollar and bond yields on Friday, as investors anticipated President Donald Trump could make progress on his fiscal plans after the U.S. Senate approved a budget blueprint that paves the way for tax cuts.

U.S. Republican Senator Rand Paul appeared to back the administration's sweeping tax cut plan, saying he was "all in" for massive tax cuts, even as the Senate passed a key budget measure without his support one day earlier.

Equities rose on Wall Street, with financials - expected to benefit from the administration's proposed policies - up 1.0 percent as the best performer of 11 major S&P sectors.

But gains were curbed by declines in healthcare stocks, off 0.1 percent, and General Electric, which lost 2.10 percent after its third-quarter results and forecast cut.

"Investors need to see more than some progress, investors need to see a higher degree of certainty that there is a tradeable narrative underpinning the market," said Peter Kenny, senior market strategist at Global Markets Advisory Group in New York.

"Investors are only willing to put so much capital at risk with the assumption that better days are ahead when it comes to tax reform."

The Dow Jones Industrial Average rose 104.13 points, or 0.45 percent, to 23,267.17, the S&P 500 gained 8.34 points, or 0.33 percent, to 2,570.44 and the Nasdaq Composite added 25.74 points, or 0.39 percent, to 6,630.80.

The dollar index, tracking the greenback against a basket of major currencies, rose 0.52 percent, with the euro down 0.7 percent to $1.1767.

Bets that Trump's planned tax cuts, infrastructure spending and other pro-business measures would push up growth and inflation had been behind a reflation trade that propelled the dollar to 14-year highs earlier this year.

European shares rebounded from their worst day in two months, also helped by well-received earnings reports for Volvo and Ericsson and high German producer-price inflation numbers.

The pan-European FTSEurofirst 300 index rose 0.18 percent. MSCI's world equity index, which tracks shares in 47 countries, gained 0.01 percent and was edging towards record highs.

The Senate budget resolution also sent U.S. Treasury yields higher, with two-year yields reaching a near nine-year high, as investors reduced bond holdings on worries about more inflation and federal borrowing.

Benchmark 10-year notes last fell 19/32 in price to yield 2.3899 percent, from 2.321 percent late on Thursday.

The increased risk appetite also sent gold lower. Spot gold dropped 0.8 percent to $1,279.25 an ounce. U.S. gold futures fell 0.71 percent to $1,280.80 an ounce.

U.S. crude rose 0.19 percent to $51.61 per barrel and Brent was last at $57.51, up 0.49 percent on the day. Still, oil was set for a weekly loss as investors sought to book profit, despite tensions in the Middle East that have slashed supplies of crude.

(Reporting by Chuck Mikolajczak; Editing by Bernadette Baum)