* Strong earnings, prospect of U.S. tax cuts drive world stocks
* Greenback strengthens against Canadian dollar, Mexican peso
* Euro retreats after gains spurred by French vote (Updates with close of European markets, adds detail on Canadian and Mexican currencies and stocks)
By Chuck Mikolajczak
NEW YORK, April 26 (Reuters) - Equities in major markets climbed on Wednesday as U.S. shares rose on strong earnings and potential tax cuts, while the dollar strengthened against the Mexican peso on the possibility of a U.S. withdrawal from the North American Free Trade Agreement.
Treasury Secretary Steve Mnuchin, who is leading U.S. President Donald Trump's effort to craft a tax package that can pass Congress, described the plan as the "the biggest tax cut" in U.S. history and said he hoped it would attract broad support.
"Expectations kind of sagged back to pre-election levels and now this tax rhetoric is rekindling investor optimism," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.
"Whether or not these plans come to pass is difficult to say. It is certainly not going to happen quickly."
Thermo Fisher Electron, up 5.1 percent, and Edwards Lifesciences, up 9.8 percent, were among the biggest boosts to the benchmark S&P 500 index after results.
The U.S. dollar strengthened against both the Mexican peso and Canadian dollar after a draft executive order to withdraw the United States from the North American Free Trade Agreement is under consideration, a senior Trump administration official said on Wednesday, confirming an earlier report from Politico.
The Dow Jones Industrial Average rose 45.82 points, or 0.22 percent, to 21,041.94, the S&P 500 gained 5.75 points, or 0.24 percent, to 2,394.36 and the Nasdaq Composite added 9.52 points, or 0.16 percent, to 6,035.01.
The U.S. dollar gained 1.87 percent versus the Mexican peso at 19.20 per dollar. The greenback rose 0.25 percent versus the Canadian dollar at 1.36.
The main Mexican and Canadian share indexes were both lower.
European shares are at 20-month highs after a three-day rally sparked by centrist Emmanuel Macron's win in the first round of French presidential elections, which considerably lessened the risk of a French exit from the single currency. Higher-than-expected earnings have also supported gains.
The pan-European FTSEurofirst 300 index rose 0.4 percent, after touching its highest level since August 2015. MSCI's gauge of stocks across the globe gained 0.12 percent after hitting a high of 457.45, to set a record for a third straight session.
Overall, first-quarter earnings for STOXX 600 companies were expected to rise 5.5 percent, according to Thomson Reuters data. In comparison, S&P 500 companies in the U.S. are expected to show 11.4-percent earnings growth expected for the quarter.
The euro euro was down 0.45 percent to $1.0876 after strengthening by more than 2 percent in the prior two sessions in the wake of the first round of French elections.
The threat of a U.S. government shutdown this weekend also receded after Trump backed away from demanding that Congress include funding for his planned border wall with Mexico in a spending bill.
U.S. Treasury prices were little changed ahead of the tax announcement after paring steep losses sustained in the last few sessions. Benchmark 10-year notes last rose 1/32 in price to yield 2.3269 percent, from 2.329 percent late on Tuesday.
Investors were also looking ahead to Thursday's policy meeting of the European Central Bank.
While no changes are expected, policymakers see scope for sending a small signal in June towards reducing monetary stimulus, according to sources, another factor underpinning the single currency.
Editing by Nick Zieminski