By Lawrence Delevingne and Amanda Cooper

(Reuters) -The dollar hit a 2025 low on Thursday but Wall Street stocks continued their recent rally as traders weighed low inflation readings, rising Middle East tensions, and the fragility of a U.S.-China trade truce.

U.S. consumer and producer inflation reports showed overall price pressures remained contained in May, largely due to declines in the cost of gasoline, cars and housing, or services like air transport. But most economists expect inflation to pick up as the impact of U.S. tariffs begins to bite.

The dollar, which has lost around 10% in value against a basket of currencies this year, fell to its lowest since April 2022, as weaker-than-expected U.S. inflation data for May suggested that the Federal Reserve could resume cutting interest rates sooner rather than later.

Global stocks continued an almost-unbroken rally since early April, leaving the MSCI All-Country World index up 0.3%, just below Wednesday's all-time high.

On Wall Street, the Dow Jones Industrial Average added 0.24%, while the S&P 500 rose about 0.4%, and the Nasdaq Composite gained 0.24%.

Shares of planemaker Boeing lost nearly 5% after an Air India aircraft carrying more than 200 people crashed in India's western city of Ahmedabad, and aviation tracking site Flightradar24 said the plane was a Boeing 787-8 Dreamliner.

Oracle shares rose 13% after the cloud service provider raised its annual revenue growth forecast.

European equities logged their fourth consecutive decline on Thursday as trade optimism waned, with the STOXX 600 down 0.3%. Stocks in China and Hong Kong also fell, led by declines in the tech sector.

The U.S. administration said on Wednesday U.S. personnel were being moved out of the Middle East due to heightened regional security risks, which briefly drove oil prices up by 4% before they receded.

"(A flare-up in tensions) is a significant tail risk, but I don't think it is anybody's baseline forecast. So it's something to watch if there is a real escalation there, then markets will take fright and that would have ramifications for the oil price," Daiwa Capital economist Chris Scicluna said.

Iran said it will not abandon its right to uranium enrichment, a senior Iranian official told Reuters, adding that a "friendly" regional country had alerted Tehran over a potential military strike by Israel.

Classic safe-haven assets got a lift. The Swiss franc and Japanese yen strengthened, pushing the dollar down 1.1% against the franc and down 0.7% against the yen, while gold rose about 1% to $3,387 an ounce.