UPDATE 1-Gundlach warns U.S. low-risk financial environment could change

(New throughout, adds S&P 500, Dow industrials and Russell 2000 setting record closing highs; further comments from Gundlach)

NEW YORK, June 13 (Reuters) - The lengthy low-risk, low-volatility U.S. financial environment should not be viewed as a "new paradigm," influential bond investor Jeffrey Gundlach said on a webcast on Tuesday.

Wall Street gained on Tuesday, with the S&P 500, Dow industrials and Russell 2000 setting record closing highs, as technology stocks bounced back and investors positioned ahead of an expected Federal Reserve interest rate hike.

Gundlach, who runs more than $105 billion at Los Angeles-based DoubleLine Capital, said investors should rotate out of U.S. stocks and into European equities, and also avoid U.S. Treasuries as he sees rates moving higher during the second half of the year.

"I strongly urge investors to peel a portion of their S&P holdings and move into Europe," Gundlach said.

Gundlach said he expects the yield on the 10-year Treasury note, which stood around 2.21 percent on Tuesday, to move higher during the latter half of 2017. However, he does not expect it to hit 3 percent. Gundlach said the relative value between U.S. Treasuries and lower-yielding overseas government bonds are keeping U.S. yields in a tight range. (Reporting By Jennifer Ablan; Editing by David Gregorio)