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By Herbert Lash
NEW YORK (Reuters) - The dollar rose on Tuesday amid concerns about a hard deadline for Britain to reach a new trade deal with the European Union, while global equity markets edged higher, lifted by a resurgent U.S. housing market that bodes well for the economy.
European stocks fell from record highs and sterling dropped more than 1% as reports that British Prime Minister Boris Johnson was set to put a no-deal EU exit back on the table.
Johnson will use his control of parliament after last week's resounding election victory to ban any extension of the Brexit transition period beyond 2020, a bold move that spooked markets.
The pound <GBP=> traded at $1.3131, down 1.49% on the day, while a profit warning from consumer goods giant Unilever <ULVR.L> sent its shares tumbling more than 7% and helped push the broader European STOXX 600 index <.STOXX> down 0.68%.
U.S.-China trade optimism and reassuring Chinese economic data had driven Asian and emerging market stocks to 18-month highs overnight, but stocks tumbled in Europe when markets in London, Frankfurt and Paris opened.
Renewed uncertainty over Britain's departure from the EU on Jan. 31 failed to carry through to Wall Street. Data showing U.S. homebuilding increased more than expected in November as permits for future home construction surged to a 12-1/2-year high lifted U.S. stocks, albeit modestly.
MSCI's all-country world index, a global benchmark for equity performance, hit an all-time high, as did the S&P 500, up 27% year to date. The two indices, along with the Nasdaq and the Dow industrials, set record closing highs.
Cash dividends for the benchmark index are set to post a new quarterly record, passing the $500 billion mark for the first time, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
Dividend growth, which has declined, remains significantly higher than wage growth, he said.
Evidence of a global economic revival is increasingly clear, said Jim Paulsen, chief investment strategist at Leuthold Group in Minneapolis, citing U.S., Chinese and European data.
"The financial markets are just being bombarded by great economic reports this week," he said.
Paulsen pointed to U.S. manufacturing output rebounding more than expected in November, up 1.1%, while industrial output also rose 1.1% last month, according to the Federal Reserve.
The economy's improving outlook might suffer after Boeing <BA.N> said on Monday it would suspend production of its best-selling 737 MAX jetliner in January as fallout from two fatal crashes of the now-grounded aircraft drags into 2020.