(Updates prices, changes byline, dateline from previous LONDON)
* Bond markets selloff continues on stimulus unwind bets
* Sterling rallies as BoE adds to ECB's hawkish bent
* Bank stocks lead Wall Street higher
By Rodrigo Campos
NEW YORK, June 28 (Reuters) - The euro hit a one-year high against the dollar on Wednesday and German 10-year Bund yields continued to rise after doubling the previous day, on bets that Europe's and Britain's central banks are preparing to scale back economic stimulus.
The dollar index .DXY slid as Bank of England Governor Mark Carney said a debate on the need to raise interest rates is due "in the coming months," adding to a hawkish tone out of the European Central Bank on Tuesday. remarks convinced traders that European monetary policy was shifting in a more hawkish direction, analysts said.
The monetary policy comments out of Europe and Britain come as the U.S. Senate delayed a healthcare legislation vote, a move seen as pushing back the timeline for other items of President Donald Trump's agenda including a tax overhaul regarded as essential to support lofty stock valuations on Wall Street.
"Prospects for infrastructure spending and tax reform are fading by the minute" after the delayed healthcare vote, said Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto.
U.S. economic data released on Wednesday showed contracts to buy previously owned homes unexpectedly fell in May, the third straight monthly decline, while mortgage applications fell the most in six months last week. stocks recovered most of their broad losses from the previous session, however. Bank stocks led the way, supported by a steeper Treasury yield curve US2US10=TWEB US5US30=TWEB .
The Dow Jones Industrial Average .DJI rose 159.1 points, or 0.75 percent, to 21,469.76, the S&P 500 .SPX gained 19.53 points, or 0.81 percent, to 2,438.91 and the Nasdaq Composite .IXIC added 56.44 points, or 0.92 percent, to 6,203.07.
The pan-European FTSEurofirst 300 index .FTEU3 lost 0.01 percent while MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.58 percent.
Emerging market stocks lost 0.49 percent. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.29 percent lower, while Japan's Nikkei .N225 lost 0.47 percent.
Analysts said comments by ECB President Mario Draghi on Tuesday continued to support the euro even as sources said on Wednesday that he had intended to signal tolerance for a period of weaker inflation, not imminent policy tightening. is a bigger story here that has to do with the repricing in general of monetary policy expectations," said Alvise Marino, FX strategist at Credit Suisse (SIX:CSGN) in New York. "There is a bit of a concern in the markets about the fact that the balance of monetary policy expectations is moving a little bit in a more hawkish direction in Europe, and you've seen that with the BOE, you've seen that with the ECB."
The dollar index .DXY fell 0.33 percent, with the euro EUR= up 0.26 percent to $1.1367.
The Japanese yen strengthened 0.18 percent versus the greenback at 112.17 per dollar, while Sterling GBP= was last trading at $1.2936, up 0.95 percent on the day.
Oil futures climbed to their highest in more than a week despite a surprise build in U.S. crude inventories, as buyers were encouraged by a small weekly decrease in U.S. production.
U.S. crude CLcv1 rose 0.84 percent to $44.61 per barrel and Brent LCOcv1 was last at $47.36, up 0.94 percent on the day.
The back end of the U.S. Treasury yield curve rose after Carney's comments.
Benchmark 10-year Treasury notes US10YT=RR were down 6/32 in price to yield 2.217 percent, from 2.198 percent late on Tuesday.
The 30-year bond US30YT=RR last fell 17/32 in price to yield 2.769 percent, from 2.744 percent on Tuesday.
Ten-year German Bund yields rose to as high as 0.406 percent and were last at 0.368 percent, up from 0.352 percent on Tuesday.
Spot gold XAU= added 0.2 percent to $1,248.91 an ounce. U.S. gold futures GCcv1 gained 0.22 percent to $1,249.60 an ounce.
Copper CMCU3 rose 0.38 percent to $5,880.00 a tonne.
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http://reut.rs/1WAiOSC Global currencies vs. dollar
http://tmsnrt.rs/2egbfVh Global bonds dashboard
http://tmsnrt.rs/2fPTds0 Emerging markets in 2017
http://tmsnrt.rs/2ihRugV
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