* Wall Street heads higher
* U.S. bond yields retreat as market selloff fades
* Dollar drifts higher on U.S. data, tax plan
* Catalan vote tests Europe (Updates with afternoon trading)
By Laila Kearney
NEW YORK, Dec 21 (Reuters) - Leading global stock markets drifted higher on Thursday in the wake of solid U.S. economic growth data and amid investor optimism following the recent passage of a $1.5 trillion tax cut plan in Washington.
The U.S. economy grew at its fastest rate in more than two years in the third quarter, the U.S. Commerce Department reported, and was poised for a slight boost next year from the tax bill passed by the Republican-led Congress.
Investors were hopeful the tax plan, which slashes corporate income tax rates to 21 percent from 35 percent, would allow companies to deploy additional capital on dividends, new projects and wages.
The Dow Jones Industrial Average rose 102.78 points, or 0.42 percent, to 24,829.43, the S&P 500 gained 11.54 points, or 0.43 percent, to 2,690.79 and the Nasdaq Composite added 26.02 points, or 0.37 percent, to 6,986.98.
MSCI’s gauge of stocks across the globe gained 0.39 percent. The pan-European FTSEurofirst 300 index rose 0.66 percent.
“The impact is still a work in progress. Tax cuts are believed to add to earnings, but the unknowns are to what extent the company behavior changes in terms of capex policy, buybacks and wage increases,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.
U.S. Treasury yields held at lower levels, with 10-year yields scaling back from a nine-month peak, providing a respite from a sharp three-day bond market selloff tied to the tax plan, as investors began bargain hunting.
In Europe, the premium investors demand for holding Spanish bonds over top-rated German peers fell to its lowest in almost three months as Catalonia held an independence election.
Euro zone bond yields held near multi-week highs mostly on the U.S. tax code overhaul vote and passage.
The U.S. dollar was little changed after two days of losses in light trading on strong economic data and the tax plan, which could prompt the Federal Reserve to raise interest rates at a faster-than-expected pace.
The dollar index, tracking the greenback against a basket of major currencies, was flat, with the euro down 0.03 percent to $1.1866.
Gold held near an earlier two-week high on the steady dollar.
Oil prices were little changed after the operator of Britain’s Forties pipeline in the North Sea said it expected to restart in early January after repairs over Christmas. Oil prices had risen since the pipeline was shut on Dec 11.
U.S. crude rose 0.36 percent to $58.30 per barrel and Brent was last at $64.84, up 0.43 percent
Additional reporting Marc Jones in London; Gertrude Chavez-Dreyfuss in New York and Sruthi Shankar in Bengaluru.; Editing by Daniel Bases and Bernadette Baum