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Canada rescinds tax to keep US trade talks going

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Dollar stays soft ahead of payrolls test

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US tax and spending bill crawls through Senate

(Updates with U.S. market close)

By Chuck Mikolajczak

NEW YORK, June 30 (Reuters) - Global stocks hit an

intraday record on Monday on hopes U.S. trade negotiations with

key partners would continue to progress, while the dollar

declined and was set for its worst first-half performance in

more than five decades.

Canada halted its digital services tax targeting U.S.

technology firms just hours before it was due to take effect, in

an effort to advance stalled trade negotiations with Washington.

Canadian Prime Minister Mark Carney and U.S. President Donald

Trump will resume trade negotiations in an attempt to agree on a

deal by July 21, in an extension from Trump's original July 9

deadline for "reciprocal" tariffs.

The July 9 deadline still holds for other countries,

although officials have suggested most deals could be done by

the September 1 Labor Day holiday.

On Monday, U.S. Treasury Secretary Scott Bessent advised

that the U.S. could move back to the tariff levels on April 2,

when Trump announced a wide array of steep duties against

countries around the globe, and that the decision for any

extension to negotiations would be up to Trump.

On Wall Street, U.S. stocks rose modestly with the S&P 500

and Nasdaq closing at record levels for a second straight

session, led by a gain of about 1% in technology,

while consumer discretionary was the worst performing

of the 11 major S&P sectors.

"Animal spirits seem to have taken hold here," said Roy

Behren, co-president of Westchester Capital Management in New

York. "It is also quite common for the last couple of days of a

quarter to see strength because of the window dressing."

The Dow Jones Industrial Average rose 275.50 points,

or 0.63%, to 44,094.77, the S&P 500 rose 31.88 points, or

0.52%, to 6,204.95 and the Nasdaq Composite rose 96.28

points, or 0.48%, to 20,369.73.

Investors will eye a flurry of labor market data in the

holiday-shortened trading week, culminating in Thursday's

government payrolls report. The report is scheduled for release

a day early, while the U.S. stock market will have a shortened

session on Thursday and be closed on Friday due to the

Independence Day holiday on July 4.

Some Fed officials, including Chair Jerome Powell, have said

the strength of the labor market gives the central bank the

leeway to hold off on cutting interest rates until they can get

a better sense of the impact Trump's tariffs will have on

inflation.

Federal Reserve Bank of Atlanta President Raphael Bostic

said Monday that the economy has yet to face the full impact of

Trump's trade tariffs and said he still sees one cut from the

Fed this year, while Chicago Federal Reserve Bank President

Austan Goolsbee said he sees no sign of stagflation but there is

the possibility of both unemployment and inflation getting worse

simultaneously.

Investors were also monitoring the progress of a huge

U.S. tax-cutting and spending bill slowly making its way through

the Senate, which Republicans will try to pass on Monday.

The Congressional Budget Office estimated the bill would add

$3.3 trillion to the nation's debt over a decade, testing

foreign appetite for U.S. Treasuries.

MSCI's gauge of stocks across the globe

gained 3.88 points, or 0.42%, to 918.67 and was on track for its

third straight session of gains after hitting an intraday record

of 919.47.

The pan-European STOXX 600 index closed down 0.42%,

but secured its second straight quarterly advance despite

dropping more than 1% in June.

The dollar index, which measures the greenback

against a basket of currencies, fell 0.41% to 96.80, with the

euro up 0.55% at $1.1783.

The greenback has struggled throughout the year, partly due

to growing expectations the Fed may become more aggressive in

cutting interest rates next year when Powell is replaced as

Chair. The dollar is down 10.5% for the first half, which would

mark its biggest drop over the first six months of the year

since 1973, when the U.S. shifted to a free-floating exchange

rate.

Against the Japanese yen, the dollar weakened 0.47%

to 143.97 while sterling edged up 0.08% to $1.3725.

The yield on benchmark U.S. 10-year notes fell

4.9 basis points to 4.234%.

U.S. crude settled down 0.63% to $65.11 a barrel and

Brent settled at $67.61 per barrel, down 0.24% on the

day.

(Additional reporting by Sabrina Valle in New York, Sruthi

Shankar and Nikhil Sharma in Bengaluru; Editing by Chizu

Nomiyama and Lisa Shumaker)