* Dollar rises on hawkish Fed, strong data
* Tech, financials lead Wall Street up; Europe shares rise
* U.S. 2-year yield hits highest since 2008 (Updates prices, adds comment)
By Lewis Krauskopf
NEW YORK, Sept 27 (Reuters) - Bets firmed on Wednesday for a U.S. Federal Reserve interest rate hike in December, boosting the dollar to a one-month high against a basket of currencies, and lifting financial stocks and Treasury yields.
A stronger-than-expected reading on durable goods orders also pulled Treasury yields higher as it suggested inflation may be picking up.
Republicans in the U.S. Congress and the White House called for slashing tax rates on businesses and the wealthy as part of a new tax plan that offers few details about how to pay for tax cuts without expanding the federal deficit.
"While I think there is optimism, time will tell us how much of an impact that (tax reform) will have on the market," said Victor Jones, director of trading at TD Ameritrade.
Bets on another interest rate hike at the Fed before the year ends firmed following Tuesday comments from Federal Reserve Chair Janet Yellen, who said the U.S. central bank needs to continue gradual rate hikes despite broad uncertainty about the path of inflation.
Perceived chances of a hike at the Fed's December meeting rose to 83 percent from 72 percent on Monday, according to the CME Group's Fedwatch tool.
The hawkish rate sentiment helped fuel gains in S&P 500 financial shares, which gained 1.6 percent. The S&P 500 tech sector rose 0.9 percent, helped by an 8.1 percent surge in shares of Micron Technology after the chipmaker's better-than-expected quarterly earnings report.
On Wall Street, the Dow Jones Industrial Average rose 18.95 points, or 0.1 percent, to 22,303.27, the S&P 500 gained 5.21 points, or 0.2 percent, to 2,502.05 and the Nasdaq Composite added 56.62 points, or 0.9 percent, to 6,436.78.
“The renewed interest in technology coupled with the likelihood of higher interest rates spurring an interest in financials, then the news on tax reform progressing, are all positive catalysts" for U.S. equities, said Alan Lancz, president of investment advisory firm Alan B. Lancz & Associates Inc in Toledo, Ohio.
U.S. small caps rallied on the expectation of lower taxes. The Russell 2000 index rose 1.6 percent and was on track for its largest one-day gain in six weeks. The index also hit a record intraday high.
The pan-European FTSEurofirst 300 index rose 0.4 percent and MSCI's gauge of stocks across the globe gained 0.1 percent.
European banks rose 2 percent and hit their highest in seven weeks.
The dollar index rose 0.4 percent, with the euro down 0.3 percent to $1.1760.
"It really is an extension of the rally kicked off by the Fed last week," said Mazen Issa, senior FX strategist at TD Securities in New York, referring to the Fed's meeting where it signaled it may raise rates for a third time this year.
Data showed new orders for key U.S.-made capital goods increased more than expected in August, pointing to strength in the economy despite an anticipated drag to growth from massive hurricanes.
Benchmark 10-year notes last fell 22/32 in price to yield 2.305 percent, from 2.229 percent late on Tuesday.
Yields on the 2-year note rose to as high as 1.483 percent, the highest since November 2008.
Brent crude futures slipped from 26-month highs, while U.S. West Texas Intermediate crude rose after stockpiles unexpectedly fell as refiners in the Golf Coast were coming back online following hurricane-related outages.
U.S. crude rose 0.39 percent to $52.08 per barrel while Brent was last at $57.74, down 1.2 percent on the day.
Spot gold dropped 0.6 percent to $1,285.60 an ounce.
Additional reporting by Saqib Iqbal Ahmed and Dion Rabouin in New York, Sruthi Shankar in Bengaluru and Nigel Stephenson in London; Editing by Hugh Lawson and James Dalgleish