Global equity markets rose yesterday as investors took in stride growing expectations the Federal Reserve will hike interest rates in June, a notion that helped US bond yields to rise and lifted the dollar to a third straight week of gains.

US home resales rose more than expected in April, suggesting the American economy continues to gather pace during the second quarter.

The data added to a growing perception the US economy will be able to withstand a rate hike next month or in July.

Wall Street opened higher, following gains in Europe, with the S&P financial sector index rising one per cent as recent comments from Fed officials suggested the possibility of a rate increase as early as June.

New York Fed president William Dudley on Thursday said the US economy was strong enough to warrant a hike.

MSCI's all-country world stock index rose 0.72 per cent and the pan-European FTSEurofirst 300 index of leading regional stocks rose one per cent to 1,323.76 points.

On Wall Street, the Dow Jones industrial average rose 126.29 points, or 0.72 per cent, to 17,561.69. The S&P 500 gained 16.38 points, or 0.8 per cent, to 2,056.42 and the Nasdaq Composite added 60.17 points, or 1.28 per cent, to 4,772.70.

The dollar traded close to two-month highs after it pushed past $1.12 per euro for the first time since March. Sterling was set for its strongest week against the euro since October as fears abated that Britain would leave the European Union, a situation that has widely been described as 'Brexit,' next month after a vote.

“The question for traders now is whether this Fed rate hike issue is a 'risk-on' or a 'risk-off' situation,” said Saxo Bank FX strategist John Hardy.

The dollar index was slightly higher at 95.417 after reaching 95.502 overnight, a level last seen on March 29.

Against the yen, the dollar gained 0.51 percent to set another three-week high of 110.58 yen.

The euro rose 0.02 percent against the dollar at $1.1204.

Oil prices were mostly flat as investors cashed in on recent gains and focus shifted again to swelling global inventories that have cushioned the impact of a series on unplanned supply outages.

Global benchmark Brent crude prices edged nine cents higher at $48.90 a barrel.

US West Texas Intermediate (WTI) crude futures traded up two cents at $48.18 a barrel.

US Treasury yields, which move in the opposite direction of prices, rose to their highest in about two months.

Benchmark US 10-year notes fell 1/32 in price, pushing their yield up to 1.8506 percent. Earlier yields hit 1.868 per cent.

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