NEW YORK (Reuters) - The U.S. dollar rebounded and world shares hit a six-month high on Friday after China’s moves to boost domestic consumption bolstered a rally driven by investor bets that the latest U.S.-China trade dispute was unlikely to dent global growth.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 21, 2018. REUTERS/Brendan McDermid

The U.S. benchmark S&P 500 stock index and the Dow industrials climbed to record peaks for a second session, although the S&P 500 closed lower, as did the Nasdaq.

MSCI’s gauge of stocks across the globe gained 0.30 percent to hit the highest level since March 13.

Sterling tumbled and pushed the dollar up after British Prime Minister Theresa May said Brexit talks had hit an impasse and that the European Union must offer an alternative plan after the bloc’s leaders rejected her plans.

The pound fell 1.42 percent, marking its biggest daily loss since June 2017.

“Sterling bears are out in full force. They’ve pushed the pound quite aggressively down this morning,” said Dean Popplewell, a chief currency strategist at Oanda in Toronto.

The dollar rebounded from early lows but was still set for its biggest weekly drop since February, as the equity market rally and rising bond yields fueled a rush to buy riskier assets. The dollar index rose 0.32 percent to 94.216 against a basket of major currencies.

A rally in Chinese markets helped lift MSCI’s broadest index of Asia-Pacific shares outside Japan 1.24 percent, partly on expectations that Beijing will pump more money into its economy to weather a trade war with the United States.

Miners and banks drove Britain’s top share index up 1.67 percent, while Germany’s DAX, home to some of Europe’s biggest exporters, rose 0.85 percent.

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The week’s euphoria underscored how over-valued U.S. stocks are, said Michael Geraghty, equity strategist at Cornerstone Capital Group in New York.

U.S. capital markets are exuberant, with stock valuations high at 21 times trailing earnings and struggling economies around the world a risk for U.S. stocks, he said.

“There’s really been no bad news to cause this market to take a breather for weeks,” Geraghty said. “The risk for U.S. equity markets is what’s going on overseas.”

The Dow Jones Industrial Average rose 86.52 points, or 0.32 percent, to 26,743.5. The S&P 500 lost 1.08 points, or 0.04 percent, to close at 2,929.67, and the Nasdaq Composite dropped 41.28 points, or 0.51 percent, to 7,986.96.

For the week, the Dow added 2.18 percent, the S&P rose 0.83 percent and the Nasdaq shed 0.29 percent.

Shares of Boeing and 3M, among U.S. companies most exposed to a trade war, closed higher. However, semiconductor makers declined after top chipmaker Micron said U.S. tariffs on Chinese goods would weigh on its results for as much as a year.

U.S. long-dated Treasury yields slipped, in tandem with those in Europe, as Brexit talks stalled between Britain and the European Union.

U.S. 2-year yields, however, remained unaffected, hitting a fresh 10-year high in the run-up to an expected rate increase at next week’s Federal Reserve monetary policy meeting.

Benchmark 10-year notes rose 4/32 in price to push yield down to 3.0628 percent.

Oil prices rose ahead of a meeting of the Organization of Petroleum Exporting Countries (OPEC) and other large crude exporters on Sunday that is expected to focus on production increases as U.S. sanctions restrict exports from Iran.

Brent crude oil settled up 10 cents at $78.80 a barrel. U.S. light crude gained 46 cents to settle at $70.78.

U.S. gold futures for December delivery settled down $10 at $1,201.30 per ounce.