World stocks at record highs, dollar slide deepens

By Lewis Krauskopf

NEW YORK (Reuters) - A global stock market index hovered near record highs on Friday, wrapping up a week when many of the world's biggest economies either raised interest rates or signalled they might do so, underlining confidence about economic growth and inflation.

The U.S. dollar slipped, continuing its slide in the wake of the Federal Reserve's decision on Wednesday to boost interest rates but maintain a gradual pace of hikes this year.

Investors were also watching a meeting of world finance chiefs in Germany beginning on Friday, where economic reform, protectionism and exchange rates are expected to be discussed.

MSCI's all-country world stock index edged up 0.1 percent on the day and touched an all-time high.

The Fed raised rates for the second time in three months on Wednesday and China hiked rates on Thursday, while Britain and a European Central Bank policymaker hinted at higher rates.

"It looks like the rest of the central banks may be thinking about tightening up a little bit," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

"It confirms that growth is improving both domestically and globally, which is what everyone has been looking for ... They wouldn't be doing that if their economies still needed aggressive monetary stimulus."

Wall Street's main indexes edged up in afternoon trading.

Adobe Systems shares jumped 4.5 percent after earnings, helping lift the tech sector 0.3 percent. Amgen shares tumbled 6.6 percent after data on the biotechnology company's cholesterol drug came in at the low end of investor expectations.

The Dow Jones Industrial Average rose 15.42 points, or 0.07 percent, to 20,949.97, the S&P 500 gained 1.49 points, or 0.06 percent, to 2,382.87 and the Nasdaq Composite added 7.62 points, or 0.13 percent, to 5,908.38.

The pan-European STOXX 600 index gained 0.2 percent. European bank stocks touched their highest point in more than a year after an European Central Bank policymaker kindled talk of a possible rate hike.

The ECB will decide later whether to raise interest rates before or after ending its bond purchase program, policymaker Ewald Nowotny told a newspaper.

The dollar edged 0.1 percent lower to a fresh five-week low against a basket of currencies. The greenback remained under pressure for a third straight session after the Fed quashed hopes for a further bull run in the currency by keeping a gradual pace to its monetary tightening policy.

"At the moment, the dollar remains in correction mode," said Fawad Razaqzada, market analyst at Forex.com in London.

Data on Friday showed a steadily improving U.S. economy, with manufacturing output rising for a sixth straight month in February and preliminary consumer confidence for the month of March increasing as well.

U.S. Treasury yields edged lower after data showing low inflation in March suggested the Fed could aim for a slower pace of rate hikes this year than it had forecast on Wednesday.

Prices for benchmark 10-year Treasuries gained 6/32 to yield 2.502 percent, from 2.524 percent late on Thursday.

Oil prices were steady and looked set to finish the week with modest gains after losing almost 10 percent last week.

Brent crude was up 0.1 percent at $51.78 a barrel. U.S. light crude rose 0.1 percent to $48.81.

(Additional reporting by Gertrude Chavez-Dreyfuss and Sam Forgione in New York, and John Geddie in London; Editing by Bernadette Baum and James Dalgleish)