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U.S. yields keep gaining, dollar hits four-month peak vs. yen

Reuters  |  NEW YORK 

By Lewis Krauskopf

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

Wall Street's main stock indexes fell, while European stock markets climbed and Britain's notched a record closing high.

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 note yield 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 <.DJI> fell 117.14 points, or 0.47 percent, to 24,651.79, the <.SPX> lost 10.11 points, or 0.37 percent, to 2,712.35 and the <.IXIC> dropped 43.17 points, or 0.58 percent, to 7,355.12.

Shares of retailer and fell after their respective results, weighing on indexes. rose 0.9 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 yield premium investors demand for holding Italian bonds over hit its highest since January, as two anti-establishment Italian parties moved closer to a government deal that would ramp up spending.

Italian stocks <.FTMIB> gained 0.3 percent after selling off sharply on Wednesday when details of a draft coalition document showed plans to ask the European Central to forgive 250 billion euros ($294.70 billion) in debt.

Strong prices helped Britain's top share index, the <.FTSE>, seal its highest ever closing level as it climbed 0.7 percent.

The pan-European stock index <.FTEU3> rose 0.62 percent, while MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 0.15 percent.

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

Benchmark 10-year notes last fell 4/32 in price to yield 3.1094 percent, from 3.095 percent late on Wednesday.

The dollar index <.DXY>, which measures the greenback against a basket of major currencies, rose 0.09 percent. The Japanese yen weakened 0.24 percent versus the U.S. currency at 110.68 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

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 $79.18 per barrel, down 0.13 percent on the day, after rising as high as $80.50.

U.S. crude fell 0.34 percent to $71.25.

"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 added 0.1 percent to $1,290.84 an ounce, after touching a new low for the year during the session.

(Additional reporting by in New York and Marc Jones and Ron Bousso in London; 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, May 17 2018. 23:48 IST