By Chris Prentice and Carolyn Cohn

WASHINGTON/LONDON (Reuters) – Wall Street saw broad gains on Friday, with the S&P 500 index hitting another record as European shares stayed just below all-time highs with a boost from the financial and materials sectors, while oil prices headed toward a fifth consecutive weekly gain.

News that U.S. President Joe Biden has secured a bipartisan infrastructure agreement with lawmakers to extend the U.S. recovery also gave a boost to stocks. The plan is valued at $1.2 trillion over eight years, of which $579 billion is new spending.

The S&P 500 index rose to a record on gains in Nike and bank stocks, while weaker-than-expected inflation data eased worries about a sudden tapering in stimulus by the Federal Reserve. [.N]

The Dow Jones Industrial Average rose 0.68% by 2:08 p.m. EDT (1808 GMT). The S&P 500 gained 0.29%, while the Nasdaq Composite dropped 0.07% , still near the previous day’s all-time high.

The S&P rose 0.28% and the Nasdaq Composite added 0.02%, nearing the previous session’s all-time high, by 11:28 a.m. EDT (15:28 GMT). The Dow Jones Industrial Average rose 0.71%.

The pan-European STOXX 600 rose 0.13%, ending the week with gains of 1% following sharp swings on concerns of higher inflation hitting real income and leading central banks to raise interest rates sooner than expected.

MSCI’s gauge of stocks across the globe gained 0.36%, near a record high reached on June 15. Britain’s FTSE 100 index was up 0.37% and Germany’s DAX edged up 0.12%.

Inflation has been front-and-center of investors’ minds, with the latest U.S. personal consumption expenditures (PCE) data showing a measure of underlying inflation rose less than expected in May. Core PCE rose 3.4% year-over-year, above the Fed’s 2% flexible target.

“Economic data released this morning was mixed, but important readings in inflation were either in line with or slightly below expectations,” Paul Hickey of Bespoke Investment Group, LLC said in a note.

Views remained mixed on whether inflation would be transitory or more permanent.

“Today’s inflation data was another vote of confidence for the inflation is transitory camp,” said Edward Moya, a senior market analyst with OANDA.

U.S. inflation will remain elevated for two to four years, and only a market crash will prevent central banks from tightening in the next six months, BofA top strategist Michael Hartnett said in a note.

A build-up of financial stability risks linked to a low interest rate environment could lead to another downturn that interrupts the labor market recovery and impedes a return to maximum employment, Boston Federal Reserve Bank President Eric Rosengren said on Friday.

Yields for benchmark 10-year U.S. Treasuries, which dipped after the infrastructure bill announcement, were at 1.5394%.

Germany’s 10-year yield, the benchmark for the euro area, edged up to -0.151%.

Emerging market stocks rose 0.84%. MSCI’s broadest index of Asia-Pacific shares outside Japan ended about 1% higher, while Japan’s Nikkei rose 0.66%.

Monetary and fiscal stimulus around the world in response to the COVID-19 pandemic is boosting financial assets, despite an uneven pace of recovery between regions, said Eddie Cheng, head of international multi-asset portfolio management at Wells Fargo Asset Management.

“Bonds go up, equity goes up, commodities go up – that is very much a liquidity-driven market,” Cheng said.

Sebastien Galy, senior macro strategist at Nordea Asset Management, said the U.S. infrastructure spending plan was “likely big enough for the economy without overheating it unnecessarily,” adding in a note that it meant “growth expectations improve somewhat.”

Oil prices edged higher on Friday, on track for a fifth consecutive weekly gain as growth in demand is expected to outstrip supply on bets that OPEC+ producers will be cautious in returning more output to the market from August.

U.S. crude recently rose 0.86% to $73.93 per barrel and Brent was at $76.04, up 0.64% on the day. Both benchmark contracts settled on Thursday at their highest levels since October 2018.

The U.S. dollar turned higher against a basket of other currencies, reversing earlier losses seen on data showed that U.S. consumer spending was flat in May, while producer price inflation came in below economists’ expectations.

The Japanese yen strengthened 0.02% versus the greenback and the euro was down 0.02% to $1.1928%.

Mexico’s peso extended gains on Friday after a surprise interest rate hike, while Latin American currencies were set to outpace their emerging market peers this week on a slew of hawkish central bank signals.

Sterling was trading at $1.3881, down 0.29% on the day and on track for its worst month versus the dollar since September, after the Bank of England kept the size of its stimulus program unchanged and left its benchmark interest rate at an all-time low of 0.1% on Thursday.

Spot gold added 0.1% to $1,777.29 an ounce. U.S. gold futures gained 0.61% to $1,776.60 an ounce.[GOL/]

(Additional reporting by Herb Lash in New York, Ritvik Carvalho in London, Andrew Galbraith in Shanghai and Tom Westbrook in Singapore; Editing by Dan Grebler and Nick Zieminski)