* US dollar, pound fall on economic stimulus hope
* Gold touches record high on flight-to-safety bid
* Stocks rise before end of quarter (Updates with U.S. markets' close)
By Manuela Badawy
NEW YORK, Sept 28 (Reuters) - The U.S. dollar and the British pound fell against the euro on Tuesday as speculation rose those countries' central banks would provide more stimulus to their economies, which sent gold to record highs.
The euro surged to a five-month high against the greenback and to a four-month high against the pound on expectations the Federal Reserve and the Bank of England were likely to pump more money into their anemic economies, a process known as quantitative easing.
Gold futures rose to $1,310 an ounce and silver hit a 30-year high as a weaker-than-forecast U.S. consumer confidence reading and a report that U.S. home prices dipped in July boosted the precious metals' safe-haven appeal.
European stocks fell after the early U.S. data showing weakness while Wall Street closed higher as investors rushed to buy up stocks with strong performance and positive outlooks to avoid missing out on the 9 percent rally in September, typically the year's worst month for stocks.
"For lack of a better term, it really is a 'classic QE day,'" said Tom Fitzpatrick, chief technical strategist at Citigroup in New York. "Bonds rally, equities rally, the dollar goes down and gold hits new highs. At this point, that is what's driving the markets."
The Fed is likely preparing a fresh round of quantitative easing measures to announce at the end of its Nov. 2-3 meeting, hedge fund adviser Medley Global Advisors said in a report on Tuesday, a market source told Reuters. [ID:nN28263335].
The Fed is also weighing a more open-ended, smaller-scale bond buying program, the Wall Street Journal reported.
The Bank of England's Adam Posen became the first of the central bank's policymakers since November to urge more credit easing for Britain in order to avoid the kind of slump Japan experienced in the 1990s. [ID:nLDE68R1R3].
"The growing realization that ultra loose monetary policies may debase currencies is leading to continuing safe-haven demand for gold," analysts at GoldCore said in a note.
The weak U.S. dollar and low bond yields reflect falling investor confidence in the strength of the recovery, analysts said.
Gold for December delivery
The Conference Board's index of consumer attitudes fell to 48.5 in September from a revised 53.2 in August, pressured by a weak labor market and business conditions. [ID:nN28171795]
U.S. home prices also dipped in July, hovering above multiyear lows according a Standard & Poor's/Case-Shiller home price report. [ID:nN28171424]
On Wall Street, the Dow Jones industrial average <.DJI> closed higher 46.10 points, or 0.43 percent, at 10,858.14. The Standard & Poor's 500 Index <.SPX> gained 5.54 points, or 0.49 percent, at 1,147.70. The Nasdaq Composite Index <.IXIC> rose 9.82 points, or 0.41 percent, at 2,379.59.
"When a month takes you by a surprise like this, you tend to be underexposed to stocks and overexposed in cash and bonds," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.
The December futures contract for the Nikkei 225 stock index <0#NK:> trading in Chicago fell 40 points to 9,515.
MSCI world equity index <.MIWD00000PUS> rose 0.33 percent and the Thomson Reuters global stock index <.TRXFLDGLPU> gained 0.40 percent.
The FTSEurofirst 300 index <.FTEU3> closed 0.3 percent lower as investors shed riskier assets, while emerging stocks <.MSCIEF> gained 0.07 percent.
The euro
Sterling
Against the Japanese yen, the dollar
The prices of U.S. Treasury debt rose as the latest data showing another drop in home prices and weaker consumer confidence added to expectations for more Fed support.
The benchmark 10-year U.S. Treasury note