* Dollar gains amid talk of Fed rate hike
* Stocks jump, helped by financials
* Oil reverses earlier losses (Updates with U.S. market openings, changes dateline, previous LONDON)
By Caroline Valetkevitch
NEW YORK, May 24 (Reuters) - The dollar hit an 8-week high against the euro on Tuesday as expectations grew that the U.S. Federal Reserve could raise interest rates sooner than later, while world stock indexes rallied with financial and tech shares.
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, pushing U.S. Treasury prices to session lows.
Last week, the Fed surprised investors when the central bank’s meeting minutes opened the door to a rate hike as early as in June.
The euro was last down 0.5 percent against the European single currency at $1.1157.
“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 Corporation in New York. “Markets will wax and wane, but generally speaking, the thrust will be toward dollar gains.”
On Wall Street, financial shares, which benefit from rising interest rates, led gains in the S&P 500 along with technology shares, though all sectors were higher.
The Dow Jones industrial average was up 202.03 points, or 1.15 percent, to 17,694.96, the S&P 500 had gained 24.78 points, or 1.21 percent, to 2,072.82 and the Nasdaq Composite had added 75.95 points, or 1.59 percent, to 4,841.74.
Some investors worry, though, that tightening borrowing costs could hamper economic expansion and reduce liquidity in stock markets, which could limit stock gains.
MSCI’s all-country world stock index was up 0.9 percent and on track to snap four straight days of losses. The pan-European FTSEurofirst 300 index of leading regional stocks jumped 2.2 percent.
Financial shares also rallied in Europe. Sentiment was underpinned by comments from European Central Bank supervisory chief Daniele Nouy, who said the bank was working on new proposals for non-performing loans that remain one of the biggest problems for the region’s economy.
In the Treasury market, benchmark 10-year Treasury notes were last 7/32 lower in price for a yield of 1.866 percent, up about 3 basis points from late on Monday.
Investors are also watching for Fed Chair Janet Yellen’s appearance at a panel at Harvard University on Friday, a day on which investors will also see the 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 was up 61 cents at $48.96 a barrel, while U.S. crude futures rose 71 cents to $48.79.
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 at 1340 GMT, off an earlier low of $1,235.35.
Additional reporting by Sam Forgione and Saqib Ahmed in New York; and Marc Jones in London; Editing by Robin Pomeroy and Nick Zieminski