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Global Markets: Dollar hits five-month high, Italian stocks slide

Reuters  |  NEW YORK 

By Lewis Krauskopf

NEW YORK (Reuters) - Italy's borrowing costs jumped on Wednesday and the country's stocks slid after reports that the two parties seeking to form Italy's next government might seek debt forgiveness, while the U.S. dollar rallied further to a five-month high.

Investors were digesting Tuesday's surge in U.S. yields on the heels of a report that fueled the dollar and hurt stocks.

The benchmark 10-year held well above 3 percent after bursting through key technical levels on Tuesday.

"The combination of higher oil prices, higher dollar and stronger yields are starting to potentially weigh on investor sentiment," said Katie Nixon, of in

"As yields go up they start to be a little bit more competitive with risk assets and with stocks in particular."

Wall Street's main indexes were little changed after sliding on Tuesday.

The Dow Jones Industrial Average fell 2.28 points, or 0.01 percent, to 24,704.13, the gained 4.37 points, or 0.16 percent, to 2,715.82 and the added 24.88 points, or 0.34 percent, to 7,376.51.

Shares of U.S. retailers rose after results from

In Italy, investors seized on a report that the anti-establishment and the far-right plan to ask the to forgive 250 billion euros ($296 billion) of Italian debt, according to a draft the parties are working on.

Italian stocks tumbled 2.3 percent while Italy's 10-year jumped to 2.096 percent.

"It's right to resonate with markets because it tells you about the sense of the wisdom between these negotiating parties," said Chris Scicluna,

Other major European stock markets were higher, and the pan-European index rose 0.22 percent.

MSCI's gauge of stocks across the globe gained 0.03 percent.

threw next month's summit between and U.S. into doubt, by saying it may reconsider if insists it unilaterally gives up its nuclear weapons.

"Investors have gotten sort of used to this. Whether we are talking about or the trade discussions with .. I think investors are recognizing we are at the beginning of the beginning of this, so it's not anything to make dramatic portfolio moves or any significant bets on," Nixon said.

yields were little changed with the 10-year hovering near a seven-year high.

Benchmark 10-year notes last fell 2/32 in price to yield 3.0871 percent, from 3.08 percent late on Tuesday.

The dollar index, which measures the greenback against a basket of six other currencies, rose 0.32 percent to 93.515 after rising to 93.632 during the session, its highest since mid December. The euro was down 0.48 percent to $1.178.

U.S. crude fell 0.5 percent to $70.95 per barrel and Brent was last at $78.05, down 0.48 percent on the day.

(Additional reporting by and in London, Danilo Masoni in Milan; Editing by Louise Ireland and Susan Thomas)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, May 16 2018. 21:12 IST