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Global Markets: U.S. yields, dollar grind higher as oil tops $80 a barrel

Reuters  |  NEW YORK 

By Lewis Krauskopf

NEW YORK (Reuters) - Yields on benchmark U.S. bonds rose on Thursday to their highest level in about seven years, pushing the U.S. dollar to a four-month peak against the yen, while prices eclipsed $80 a barrel for the first time since November 2014.

U.S. and European shares gained modestly, with MSCI's gauge of stocks across the globe edging up 0.18 percent.

European yields generally were also rising along with U.S. peers as investors eyed political risk in

The focus this week has centered on rising yields, as investors point to data reflecting a strong U.S. that could indicate firming inflation.

The benchmark 10-year U.S. hovered above 3.1 percent, continuing a surge higher earlier in the week.

"I think it's the same thing we have had really for the past couple of weeks: The inflation trade is being put on," said Walter Todd, at in Greenwood,

Looking at the rise in rates, the dollar and oil, Todd said, "all that is being driven by the same backdrop, which is the U.S. is hitting on all cylinders."

On Wall Street, the Dow Jones Industrial Average rose 33.18 points, or 0.13 percent, to 24,802.11, the gained 6.21 points, or 0.23 percent, to 2,728.67 and the added 17.62 points, or 0.24 percent, to 7,415.92.

Energy shares rose 1.3 percent, bolstered by prices.

Investors were also watching trade developments between the and China, as the two countries launched a second round of talks to try to avert a damaging tariff war.

The premium investors demand for holding Italian bonds over top-rated German peers jumped to its highest since January as investors fretted about a confrontation between a new government and the ECB over debt forgiveness.

Italian stocks edged higher after selling off on Wednesday after details of a draft coalition document showed plans to ask the European Central to forgive 250 billion euros ($294.70 billion) in debt.

The pan-European stock index rose 0.51 percent.

U.S. 10-year yields climbed following a steep market selloff earlier in the week.

Benchmark 10-year notes last fell 5/32 in price to 3.1112 percent, from 3.095 percent late on Wednesday.

The dollar index, which measures the greenback against a basket of major currencies, rose 0.09 percent. The Japanese yen weakened 0.37 percent versus the U.S. currency at 110.80 per dollar.

"The near-term picture remains positive for the dollar with Treasury yields showing few signs of topping, a move that makes the buck a more enticing bet to income-seekers," said Joe Manimbo, at in

prices hit $80 a barrel for the first time since November 2014 on concerns that Iranian exports could fall because of renewed U.S. sanctions, reducing supply in an already tightening market.

Brent was last at $80.29, up 1.27 percent on the day, after rising as high as $80.33.

U.S. crude rose 0.71 percent to $72.00 per barrel.

"The geopolitical noise and escalation fears are here to stay," said Norbert Rücker, and commodity research at Swiss Julius Baer. "Supply concerns are top of mind after the left the nuclear deal."

Spot gold dropped 0.1 percent to $1,288.96 an ounce, touching a new low for the year during the session.

(Additional reporting by in New York, Marc Jones and Ron Bousso in London; Editing by Bernadette Baum)

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

First Published: Thu, May 17 2018. 21:24 IST