* Dollar on pace for biggest weekly gain since December
* World stocks set for 11th straight month of gains
* Tech sector buoys Wall Street after record high close (Updates with U.S. afternoon trading)
By Lewis Krauskopf
NEW YORK, Sept 29 (Reuters) – The dollar was headed for its strongest week of the year on Friday as it rose again, while world stock markets climbed back near record-high levels on the last trading day of the quarter.
Firming expectations for another U.S. interest rate increase by year-end, combined with U.S. President Donald Trump’s tax-cut plan, have dominated markets for most of the week.
Data on Friday showed U.S. consumer spending barely rose in August but the report did little to change expectations that the Federal Reserve would raise interest rates again in December. Another report showed the Chicago purchasing management index, which gauges factory activity, came in better than expected for September.
“The economic data we got was either on target or it was slightly better than expected so there wasn’t anything negative at all to put a pause on things,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
”Generally, the overall economic backdrop is very solid. In a bull market when you don’t have bad news you tend to get up moves in the market,” Frederick said.
The Dow Jones Industrial Average fell 22.07 points, or 0.1 percent, to 22,359.13, the S&P 500 gained 6.17 points, or 0.25 percent, to 2,516.23 and the Nasdaq Composite added 37.36 points, or 0.58 percent, to 6,490.81.
The S&P technology sector led the way, rising 0.6 percent.
The S&P 500 had set a record closing high on Thursday.
The pan-European FTSEurofirst 300 index rose 0.44 percent and MSCI’s gauge of stocks across the globe gained 0.39 percent.
The MSCI global index was within 0.5 percent of an all-time high and on pace for its 11th consecutive positive month.
“The pattern that has been working, easy money but relatively slow economic growth that keeps the tightening from becoming too tight, continues to augur for a decent outlook for equities in particular,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.
The dollar index rose 0.04 percent. The greenback was up about 1 percent for the week, on track for its best week since December.
The euro was up 0.2 percent to $1.1808.
“Economically the situation in the U.S. merits the fact that the dollar has gained,” said Juan Perez, currency strategist at Tempus Inc in Washington.
Most U.S. Treasury yields edged higher on encouraging data about steady economic growth and reports Trump met with former Fed Governor Kevin Warsh about a potential nomination to head the U.S. central bank and replace current Chair Janet Yellen.
“He’s quite a contrast to Yellen,” said Gennadiy Goldberg, interest rates strategist at TD Securities in New York. “She might be replaced by someone who’s relatively more hawkish.”
Benchmark 10-year notes last fell 3/32 in price to yield 2.3175 percent, from 2.307 percent late on Thursday.
U.S. crude fell 0.21 percent to $51.45 per barrel and Brent was last at $56.50, down 1.15 percent on the day.
Spot gold dropped 0.2 percent to $1,284.10 an ounce.
Additional reporting by Richard Leong and Dion Rabouin in New
York; Editing by Nick Zieminski and Lisa Shumaker