NEW YORK (Reuters) - MSCI’s global stock index hit a record high on Thursday and the U.S. dollar gained along with U.S. Treasury yields after reports the United States has reached in principle a “phase one” trade deal with China.

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., December 21, 2016. REUTERS/Andrew Kelly

Citing two people familiar with the trade negotiations, Reuters reported that the United States had offered to cut existing tariffs on Chinese goods by as much as 50%, and to suspend new tariffs due to kick in Sunday with an aim to securing a deal.

While the U.S. stock trading session ended without official confirmation of a deal, President Donald Trump had encouraged investor appetites for risk early in the day after he said the countries were “very close.” This also pushed safe-haven gold prices lower while oil futures gained.

“I don’t think many people expect a definite conclusion to what’s happening between the U.S. and China. But if we can reach some status quo and if things aren’t continuing to deteriorate, maybe that can be taken as a positive,” said Willie Delwiche, investment strategist at Baird.

The Dow Jones Industrial Average .DJI rose 220.75 points, or 0.79%, to 28,132.05, the S&P 500 .SPX gained 26.94 points, or 0.86%, to 3,168.57 and the Nasdaq Composite .IXIC added 63.27 points, or 0.73%, to 8,717.32.

The pan-European STOXX 600 index .STOXX rose 0.33% and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.69%, surpassing the previous record reached in January 2018.

Earlier, European Central Bank head Christine Lagarde had promised a strategic review of the bank’s workings and left its easy money stance unchanged, as expected.

On Wednesday, the U.S. Federal Reserve held interest rates steady and signaled borrowing costs will not change anytime soon, with moderate economic growth and historically low unemployment expected to persist through the 2020 presidential election.

But U.S. investors appeared to be laser focused on U.S.-China trade relations headlines, which have long been a major driver of volatility.

In currencies, the dollar jumped to a near two-week high against the safe-haven Japanese yen.

The dollar index .DXY, which measures the greenback against a group of major currencies, rose 0.23%, with the euro EUR= down 0.04% to $1.1124. The Japanese yen weakened 0.69% versus the greenback at 109.32 per dollar.

“We have seen a strong risk-on reaction in the FX markets,” said Vassili Serebriakov, an FX strategist at UBS in New York.

Sterling had a volatile day, falling below its eight-month high against the dollar with voting underway in a UK election which could decide whether Britain exits the European Union or holds a referendum that could reverse the country’s Brexit vote.

Sterling GBP= was last trading at $1.3163, down 0.23% on the day.

If UK Conservatives led by Boris Johnson, gain a majority, that would allow the stalled Brexit deal to be passed. The latest polls have shown his lead shrinking.

Exit polls will begin around 2200 GMT, after voting closes. Whether there will be a clear winner or another hung parliament is likely to emerge between 0400 GMT and 0600 GMT.

U.S. Treasury yields spiked with most maturities hitting four-week highs after the reports on trade deal progress.

Benchmark 10-year notes US10YT=RR last fell 31/32 in price to yield 1.8974%, from 1.79% late on Wednesday.

The 30-year bond US30YT=RR last fell 67/32 in price to yield 2.3154%, from 2.22% late on Wednesday.

Oil prices were also boosted by trade optimism as the U.S.-China tensions had raised concerns about global demand for crude.

U.S. crude CLcv1 rose 0.83% to $59.25 per barrel and Brent LCOcv1 was last at $64.33, up 0.96% on the day.

In commodities, spot gold XAU= dropped 0.4% to $1,469.49 an ounce.

Here is a graphic plotting the pound's move versus election odds: