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U.S. yields at 10-month high on China report; S&P 500 snaps rally

Reuters  |  NEW YORK 

By Caroline Valetkevitch

(Reuters) - yields hit 10-month peaks as investors worried that would slow U.S. purchases, but they retraced to end nearly unchanged on Wednesday, and the stock index snapped its six-day rally.

The report that China, the world's biggest holder of U.S. Treasuries, could slow or stop buying the bonds also pushed the to a more than six-week low against the Japanese yen.

The dollar rose against its Canadian counterpart and Mexico's peso after a report said increasingly believes that U.S. will soon announce his intention to withdraw from the North American Free Trade Agreement treaty.

alongside the report on weighed on U.S. stocks, which have had a strong run so far in the new year. The also broke a six-day string of gains.

"The Chinese are applying pressure to the Treasury market just as the (Federal Reserve) is about to step away from being the buyer of last resort," said Boris Schlossberg, of strategy at in

Benchmark 10-year note yields were last down to 2.558 percent, after peaking at 2.597 percent, the highest since March 15.

The between two-year notes and 10-year notes was last flatter at 58.6 basis points, after steepening to 62.4 basis points earlier Wednesday.

Earlier, Germany's 10-year yield hit its highest since the October meeting when policymakers first announced the extension of its bond-buying scheme.

A combination of factors has pushed yields higher in recent weeks, with growth and prices leading investors to speculate that the world's major central banks might withdraw from their stimulus programme sooner rather than later.

On Wall Street, the Dow Jones Industrial Average <.DJI> fell 16.67 points, or 0.07 percent, to 25,369.13, the <.SPX> lost 3.06 points, or 0.11 percent, to 2,748.23 and the Composite <.IXIC> dropped 10.01 points, or 0.14 percent, to 7,153.57.

"The market has started on a very strong note this year. Right or wrong, you're hearing an overwhelming bullishness from strategists suggesting that the market momentum move should continue as the year progresses, so you have a lot of flowing into the market," said David Katz, at in

"Today's move was negative. It's the first time basically in a year where people have any concerns about bonds possibly competing with stocks, so that's where you had the early selloff," he said, but the recovery from early lows points to the positive sentiment.

The pan-European index <.FTEU3> lost 0.32 percent and MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 0.05 percent.

In the foreign exchange market, the dollar touched 111.29 yen, its weakest since late November, but was last flat.

The dollar index <.DXY> fell 0.18 percent.

settled near three-year highs after U.S. data showed a drop in crude inventories and production, even as fuel inventories rose.

U.S. crude futures settled at $63.57 a barrel, up 61 cents, or 1 percent, their highest settlement since December 2014. Brent crude futures settled at $69.20, up 38 cents. The session high for the benchmark was $69.37, which was the highest since May 2015.

For Reuters' Live blog on European and UK stock markets, open a window on Eikon by pressing F9 and type in 'Live Markets' in the

(Additional reporting by and in New York; Editing by and James Dalgleish)

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

First Published: Thu, January 11 2018. 04:40 IST