By Lewis Krauskopf
NEW YORK (Reuters) - Yields on benchmark U.S. government 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 oil 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 FTSE 100 notched a record closing high.
The benchmark 10-year U.S. Treasury 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, chief investment officer at Greenwood Capital in Greenwood, South Carolina.
On Wall Street, the Dow Jones Industrial Average <.DJI> fell 117.14 points, or 0.47 percent, to 24,651.79, the S&P 500 <.SPX> lost 10.11 points, or 0.37 percent, to 2,712.35 and the Nasdaq Composite <.IXIC> dropped 43.17 points, or 0.58 percent, to 7,355.12.
Investors were also watching trade developments between the United States 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 Germany 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 Bank to forgive 250 billion euros ($294.70 billion) in debt.
The pan-European FTSEurofirst 300 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 bond market selloff earlier in the week.
Benchmark 10-year notes
The dollar index <.DXY>, which measures the greenback against a basket of major currencies, rose 0.09 percent. The Japanese yen
"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, senior market analyst at Western Union Business Solutions in Washington.
Oil 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.
"The geopolitical noise and escalation fears are here to stay," said Norbert Rücker, head of macro and commodity research at Swiss bank Julius Baer. "Supply concerns are top of mind after the United States left the Iran nuclear deal."
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)