* Dollar gains amid talk of Fed rate hike
* Stocks jump, helped by financials
* Oil reverses early losses; gold falls (New throughout, updates prices and market activity with European shares closing up)
By Caroline Valetkevitch
NEW YORK, May 24 (Reuters) - The dollar jumped on Tuesday, hitting an eight-week high against the euro, while U.S. bond prices fell as expectations grew that the Federal Reserve could raise interest rates soon.
World stock indexes rallied, led by shares of financial companies, which benefit from rising interest rates, and technology and other growth-oriented sectors.
Surprisingly strong data on U.S. new home sales in April supported the view the economy may be strong enough for the Fed to raise interest rates as early as June.
Last week, the Fed surprised investors when the central bank's meeting minutes opened the door to a rate hike as early as June.
The euro was last down 0.6 percent against the dollar at $1.1147 and hit its lowest level since March 24.
"A re-pricing of Fed tightening expectations is the principal driver of the U.S. dollar's resurgence," said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York. "Markets will wax and wane, but generally speaking, the thrust will be toward dollar gains."
MSCI's all-country world stock index was up 1 percent, while the pan-European FTSEurofirst 300 index of leading regional stocks ended up 2.3 percent.
The Dow Jones industrial average was up 211.87 points, or 1.21 percent, to 17,704.8, the S&P 500 gained 26.47 points, or 1.29 percent, to 2,074.51 and the Nasdaq Composite added 83.10 points, or 1.74 percent, to 4,848.88.
The gains indicated equities investors were no longer as worried as they had been that tighter borrowing costs could pressure stocks.
"I think investors are becoming more comfortable with an early rate hike because even if the Fed does raise rates in June, it will remain extremely accommodative," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
In the U.S. Treasury market, benchmark 10-year Treasury notes were last 10/32 lower in price for a yield of 1.876 percent, up from late on Monday.
Investors will watch Fed Chair Janet Yellen's appearance at a panel at Harvard University on Friday, the same day as they take in a revised estimate of U.S. first-quarter growth.
Oil prices gained as investors awaited crude oil inventory data from the United States that was expected to show a shrinking supply overhang.
Brent futures rose 61 cents to $48.96 a barrel, while U.S. crude futures rose 50 cents to $48.58.
The strong dollar took a toll on gold, which fell to a four-week low. Spot gold was down 0.9 percent at $1,236.81 an ounce, off a session low of $1,235.35.
Additional reporting by Sam Forgione and Saqib Ahmed in New York and Tanya Agrawal; and Marc Jones in London; Editing by Nick Zieminski and David Gregorio