GLOBAL MARKETS-Shares fall, dollar gains on U.S. economic data
* Upbeat U.S. labor market, consumer price rise boost economic outlook * Brent crude near $111 a barrel on unrest in Egypt * U.S. Treasuries yields rise to their highest in two years * Dollar climbs after drop in U.S. weekly jobless claims By Herbert Lash NEW YORK, Aug 15 (Reuters) - The dollar rose and global equity markets swooned on Thursday after slightly upbeat U.S. jobs data and gains in consumer prices added weight to the view the Federal Reserve will soon begin to trim its massive bond buying program. The number of Americans filing new claims for jobless benefits fell to almost a six-year low last week while consumer prices hinted at pricing power in the sluggish U.S. economy. Stocks on Wall Street fell more than 1 percent on opening after release of the government reports. U.S. Treasuries yields rose sharply to their highest in two years, with the benchmark 10-year note rising to 2.8 percent. A measure of global equity markets slid more than 1 percent, as did major European stock indices. "It's a set of data that will add to the September tapering conversation," said Tom Porcelli, chief U.S. economist at RBC Capital Markets in New York. "The bottom line is that the tapering will probably happen either in September or October, but it will be a gradual one." The Dow Jones industrial average was down 165.01 points, or 1.08 percent, at 15,172.65. The Standard & Poor's 500 Index was down 17.22 points, or 1.02 percent, at 1,668.17. The Nasdaq Composite Index was down 44.47 points, or 1.21 percent, at 3,624.80. MSCI's all-country world index fell 1.27 percent, while the FTSEurofirst 300 of leading European shares fell 1.23 percent to 1,225.04. Financial markets have largely positioned for the Fed to start paring its monthly $85 billion spending on bonds in September but conflicting signals from policymakers, and muted inflation data, lately have undermined this conviction. On Wednesday, St. Louis Fed President James Bullard cited the inflation outlook when he said he hadn't decided whether next month's policy meeting would be too soon to curb the asset purchases, known as quantitative easing, or QE. Talk about the timing of an end to the Fed's bond buying has dominated security markets because it is likely to boost U.S. Treasury yields, support demand for the dollar and could hurt shares and commodities, which have gained as world central banks have primed markets with liquidity. An improved economic outlook for the euro zone prompted investors to dump safe-haven German bunds, pushing yields to their highest since April 2012. Data on Wednesday confirmed the euro zone emerged from a long recession in the second quarter, and business surveys earlier in the week raised expectations the recovery might gather pace in the second half of the year. Ten-year German Bund yields rose as high as 1.906 percent, while the 10-year U.S. Treasury note was down 25/32 in price to yield 2.8029 percent. The dollar climbed to a near two-week high against the euro and a more than one-week high against the yen. The euro was last down 0.17 percent at $1.3233, while the dollar hovered near break-even, up 0.01 percent at 98.14 yen . Brent oil prices climbed above $111 per barrel to a four-month high on fears that escalating violence in Egypt could affect the Suez Canal or spread in the Middle East, where some supplies are already disrupted. Front-month September Brent, which expires on Thursday, was trading 65 cents higher at $110.85 after jumping by over a dollar earlier to $111.53, its highest level since April 2. U.S. oil rose 38 cents to $107.23.
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