* Dollar index up from lowest since January 2015
* Wall Street edges higher; European stocks rebound
* Gasoline futures continue to rise as refineries shut
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh (Updates to U.S. market open, adds details, changes dateline, previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Aug 30 (Reuters) – The dollar and U.S. Treasury yields rose on Wednesday after economic data indicated solid momentum, keeping alive the prospect of a U.S. interest rate increase in December.
U.S. stocks edged higher, while crude oil prices slid and gasoline futures soared as a fallout of flooding and damage from Tropical Storm Harvey.
Gross domestic product data on Wednesday showed the U.S. economy grew faster than initially thought in the second quarter, while a separate report showed U.S. private-sector employers added 237,000 jobs in August, the biggest monthly increase in five months.
“The second quarter GDP revisions were strong, and when coupled with the first quarter revisions, the overall level seems relatively impressive for the first half of the year,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets in New York.
Benchmark 10-year notes were down 4/32 in price to yield 2.15 percent, up from 2.14 percent on Tuesday.
The dollar, which rose on speculation that the European Central Bank could step in to weaken the euro, also was helped by the strong data. The euro was 0.48 percent lower to $1.1914.
“People are starting to sit back and wonder: ‘what is the ECB going to do about inflation still being below expectations in Europe?’,” said Dean Popplewell, chief currency strategist at Oanda in Toronto.
The ECB is set to hold a policy meeting next week.
The dollar index, which measures the greenback against a basket of six major currencies, was 0.54 percent higher at 92.747.
The greenback pared gains slightly after U.S. President Donald Trump dismissed any diplomatic negotiations with North Korea, saying “talking is not the answer.”
On Wall Street, stocks were slightly higher as the strong U.S. data helped offset worries over tensions with North Korea.
“We suspect the North Korea problem, although not yet causing a rush to exit, will eventually take a negative toll on the markets,” said Peter Cardillo, chief market economist at First Standard Financial.
Also on the radar is Trump’s first speech specifically on tax policy later in the day.
The Dow Jones Industrial Average rose 6 points, or 0.03 percent, to 21,871.37, the S&P 500 gained 5.1 points, or 0.21 percent, to 2,451.4 and the Nasdaq Composite added 36.70 points, or 0.58 percent, to 6,338.58.
Investors piled back into European stocks on Wednesday, boosting indexes in a relief rally a day after geopolitical concerns caused a sharp dip across equity markets. The pan-European STOXX 600 gained 0.81 percent.
MSCI’s world index, which tracks shares in 46 countries, was 0.07 percent higher.
Gasoline futures hit their highest since mid-2015 as flooding and other damage from Tropical Storm Harvey shut over a fifth of U.S. refineries, curbing demand for crude oil while raising the risk of fuel shortages.
U.S. gasoline futures were up 6.15 percent at $1.893 a gallon, having hit $1.914, the highest since July 2015.
Brent oil, the international benchmark for crude trading, was down 0.53 cents at $51.47 a barrel. U.S. crude was down 0.35 cents to $46.09.
Gold steadied as the stronger dollar pushed the metal off Tuesday’s 9-1/2 month high, but the precious metal remained firmly above $1,300 on renewed tensions between Washington and North Korea.
Reporting by Saqib Iqbal Ahmed; Additional reporting by Karen
Brettell in New York; Editing by Chizu Nomiyama