* Euro down, sources signal no Draghi policy clues at Jackson Hole
* Zinc hits highest in a decade on Chinese infrastructure demand
* Eyes on Fed minutes due at 1800 GMT (Updates with U.S. prices, adds commentary, changes byline, previous dateline London)
NEW YORK, Aug 16 (Reuters) - U.S. shares rose Wednesday as investors bet that weak housing data could slow U.S. rate hikes, while the dollar gained on the euro as hopes ebbed for a monetary policy change in Europe.
U.S. Treasury yields were little changed in advance of the release of minutes from the U.S. Federal Reserve's July meeting as investors waited for clues about whether the U.S. central bank would announce a plan to begin reducing its balance sheet.
Data showed that U.S. homebuilding unexpectedly fell in July amid broad declines in single- and multi-family home construction, suggesting the market was struggling to rebound after a second-quarter slump.
Equity investors bet the weak data would hold back the Fed, according to Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St. Louis.
"Economic data that's coming in below expectations is being translated into expectations the Fed won't raise three times next year," said Wren.
The Dow Jones Industrial Average rose 72.42 points, or 0.33 percent, to 22,071.41, the S&P 500 gained 8.18 points, or 0.33 percent, to 2,472.79 and the Nasdaq Composite added 30.83 points, or 0.49 percent, to 6,363.85.
But the U.S. dollar rose for a third straight session against a basket of currencies, on bets for a December rate hike and cooling U.S.-North Korea tensions.
President Donald Trump on Wednesday praised North Korean leader Kim Jong Un for a "wise" decision not to fire missiles towards that U.S. territory of Guam.
The dollar index rose 0.21 percent, with the euro down 0.3 percent to $1.1698 after Reuters reported that European Central Bank chief Mario Draghi would not signal policy changes at a meeting next week in Jackson Hole, Wyoming.
"This has been a classic risk off/risk on rotation across capital markets and the dollar has been no exception," said Bill Northey, chief investment officer at the Private Client Group at U.S. Bank in Helena, Montana.
Northey expects the Fed to begin reducing its balance sheet in September and raise rates in December.
The pan-European STOXX 600 index rose 0.7 percent, after hitting its highest level in a week earlier in the day.
Oil prices pulled back Wednesday after a U.S. government report suggested crude production was edging higher, even as crude stockpiles plunged their most in nearly a year.
U.S. crude fell 0.76 percent to $47.19 per barrel and Brent was last at $50.62, down 0.35 percent on the day.
Spot gold added 0.1 percent to $1,272.91 an ounce as the dollar rose and investors turned away from safe haven assets. Copper rose 2.77 percent to $6,555.50 a tonne.
Metals markets were buoyant, with the price of zinc, used to galvanise steel, hitting its highest in a decade on Chinese infrastructure demand, boosting mining company shares.
Benchmark zinc on the London Metal Exchange did not trade in official rings but was bid up 2.2 percent at $3,026 after earlier touching $3,037, the highest since October 2007.
(Additional reporting by Nigel Stephenson, Saikat Chatterjee, Abhinav Ramnarayan and Helen Reid in London, Wayne Cole in Sydney, graphics by Nigel Stephenson and Helen Reid; Editing by Gareth Jones and Nick Zieminski)