By Michael Connor
NEW YORK (Reuters) - U.S. and European equities traded near record highs on Tuesday, and the euro tumbled on signals the European Central Bank may accelerate its 1 trillion euro bond-buying program over the next two months.
The dollar gained 1.6 percent against the euro and was broadly ahead for a second day, while U.S. Treasuries prices fell, pulling down yields after data showed that U.S. housing starts in April rose to the highest in nearly 7-1/2 years.
Oil prices slumped more than 3 percent, partly because of the dollar rally.
Wall Street was moderately higher after closing the previous session at record highs. The Dow Jones industrial average <.DJI> touched a new intraday high of 18,325 and was last up 20.08 points, or 0.11 percent, to 18,318.96.
The S&P 500 <.SPX> advanced 0.64 points, or 0.03 percent, to 2,129.84 and the Nasdaq Composite <.IXIC> lost 3.89 points, or 0.08 percent, to 5,074.55.
Traders said the stronger-than-forecast housing data could encourage Federal Reserve policymakers to raise interest rates sooner rather than later.
"The markets are overvalued at this time but it's the only place where capital is going," said Drew Horter, founder of Horter Investment Management in Cincinnati.
European markets shot up after senior ECB policymaker Benoit Coeure talked of adjusting the bank's bond-buying program.
He said the speed of the recent spike in bond yields was worrisome. It has effectively wiped out the benefits of quantitative easing, he said, and the ECB could "moderately" increase its buying in May and June, and possibly in September.
His comments pushed the euro back below $1.12 for the first time in a week. The FTSEurofirst 300 <.FTSE> ended up 1.7 percent. Gains of more than 2 percent on Germany's DAX <.GDAXI> and the CAC 40 in Paris <.FCHI> outpaced a 0.38 percent rise on London's FTSE <.FTSE>.
European bond yields tumbled, with benchmark 10-year German Bunds down 4 basis points at 0.61 percent after going as low as 0.55 percent.
The dollar index <.DXY> was last up 1.25 percent. The euro last traded off 1.6 percent at $1.1134.
Treasuries were also hurt by large offerings of corporate bonds, with yields on the 10-year note last at 2.2762 percent on a price decline of 13/32.
China's surging stocks and a jump in the New Zealand dollar after a rise in inflation dominated Asian trading.
The CSI300 index <.CSI300>, already up over 30 percent this year, surged 3.4 percent and the Shanghai Composite Index <.SSEC> rose 3.0 percent, as investors welcomed Beijing's 2015 guidelines for economic reform.
Oil prices fell more than 3 percent, with U.S. crude extending losses for a fifth straight day, on the dollar's rally as well as on evidence that the United States and top oil exporter Saudi Arabia were pumping more than the world needed.
U.S. crude
(Reporting By Michael Connor in New York; Editing by Meredith Mazzilli and David Gregorio)
