* All three major U.S. stock averages higher
* Dollar sinks to lowest since April 2018
* Stimulus check negotiations continue in Washington
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh (Updates to U.S. market open, changes dateline to NEW YORK (was LONDON), changes byline)
By Stephen Culp
NEW YORK, Dec 30 (Reuters) - Wall Street advanced and the dollar dipped to its lowest in more than two years on Wednesday, the penultimate trading day in an extraordinary year of pandemic, recession and recovery.
All three major U.S. stock indexes were up in a broad rally, as impending stimulus and the ongoing rollout of COVID-19 vaccines fed optimism over economic recovery in 2021.
"I would caution against reading too much into trading action this week because it's a shortened week and volumes are typically down, so there tends to be more volatility," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.
"The dollar is a continuation of what we've seen in the last few months," Carlson added. "This is partly in anticipation that since Europe had a deeper decline, its rebound will have more of a snap-back."
U.S. Senate Majority Leader Mitch McConnell introduced a bill late Tuesday that combines beefier $2,000 direct fiscal aid payments to Americans with provisions involving social media company protections and election security. approved a coronavirus vaccine developed by Oxford University and AstraZeneca AZN.L in the latest development in the rapid progression, testing, approval and deployment of drugs to battle the disease. Dow Jones Industrial Average .DJI rose 165.7 points, or 0.55%, to 30,501.37, the S&P 500 .SPX gained 13.87 points, or 0.37%, to 3,740.91 and the Nasdaq Composite .IXIC added 34.01 points, or 0.26%, to 12,884.23.
European stocks reversed gains and headed slightly lower as investors took profits in the wake of strong gains.
The pan-European STOXX 600 index .STOXX lost 0.13% and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.49%.
Emerging market stocks rose 1.58%. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 1.67% higher, while Japan's Nikkei .N225 lost 0.45%.
U.S. Treasury yields were essentially flat on Wednesday morning in thin trading as investors bet that Republicans were unlikely to approve the passage of proposed $2000 stimulus checks.
Benchmark 10-year notes US10YT=RR last fell 1/32 in price to yield 0.9364%, from 0.935% late on Tuesday.
The 30-year bond US30YT=RR last fell 4/32 in price to yield 1.679%, from 1.674% late on Tuesday.
The dollar fell the lowest since April 2018 against a basket of world currencies as investors bet on more fiscal support and positioned for year-end in light trading volume.
The dollar index .DXY fell 0.41%, with the euro EUR= up 0.36% to $1.2291.
The Japanese yen strengthened 0.42% versus the greenback at 103.15 per dollar, while Sterling GBP= was last trading at $1.3608, up 0.80% on the day.
Crude oil prices gained ground on the back of the weaker dollar and a dip in U.S. inventories. crude CLcv1 rose 1.27% to $48.61 per barrel and Brent LCOcv1 was last at $51.33, up 0.47% on the day.
Gold gained ground as the safe-haven metal countered a dip in the greenback.
Spot gold XAU= added 0.3% to $1,884.41 an ounce.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC-Emerging markets
http://tmsnrt.rs/2ihRugV GRAPHIC-World FX rates
http://tmsnrt.rs/2egbfVh GRAPHIC-MSCI All Country World Index Market Cap
http://tmsnrt.rs/2EmTD6j GRAPHIC-Global assets in 2020
http://tmsnrt.rs/2yaDPgn
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Larry King and Nick Zieminski)