GLOBAL MARKETS-U.S. bond yields fall from 2-year peaks; stocks mixed
* U.S. bond yields scale back from two-year highs
* Global stock markets weaker but Wall Street perks up
* Wednesday's Fed minutes could clarify policy outlook
* U.S. dollar falls to 6-month low against euro
By Richard Leong
NEW YORK, Aug 20 (Reuters) - U.S. bond yields receded from two-year highs on Tuesday on revived safe-haven bids as prices on most world stock exchanges fell to the lowest level in over a month on concerns that less U.S. monetary stimulus will hamper global growth.
Wall Street stocks bucked the downdraft in global equities, with the Standard & Poor's 500 index rebounding from a four-day losing streak, the longest so far this year.
The dollar fell against major currencies, hitting a six-month low against the euro, though the weaker U.S. currency helped steady gold prices.
Speculation whether the U.S. Federal Reserve might shrink its bond purchases at its policy meeting next month also knocked oil prices lower, although unrest in Egypt and reduced Libyan supply stemmed a further decline.
"The ongoing meltdown in regional currencies is starting to negatively influence all risk assets and, for the moment, is helping create a bid for the Treasury market," said John Briggs, U.S. rate strategist at RBS Securities in Stamford, Connecticut.
The Federal Open Market Committee, the U.S. central bank's policy-setting group, will release the record of its July 30-31 meeting on Wednesday. Traders anticipate the minutes will contain clues whether the Fed is on track to reduce its $85 billion monthly purchases of U.S. bonds at its September 17-18 meeting.
Anxiety that U.S. policymakers would dial back the Fed's third round of quantitative easing, or QE3, has been accompanied by worries the Fed is looking to raise short-term interest rates, even though Fed officials have assured markets that would not happen for a long time.
The yield on 10-year Treasury notes fell to 2.834 percent, down 6 basis points from late on Monday, when it touched 2.90 percent, a level not seen since late July 2011.
Treasury yields are benchmarks for domestic mortgage rates and other long-term borrowing costs. Some economists have cautioned the surge in yields since May would slow the housing recovery, auto sales and other rate-sensitive sectors in the world's largest economy.
German government bonds, Europe's equivalent benchmark, moved in lock step with U.S. yields, easing to 1.839 percent after topping 1.924 percent a day earlier, which was the highest level since March 2012.
The spike in Treasury yields has exerted downward pressure on stocks since last week.
"This has been a technical pullback (in stocks), and with the 10-year yield near 3 percent, we are pretty close to reversing it," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.
Wall Street stocks opened slightly higher on Tuesday after recording their longest losing streak in 2013 as major retailers reported positive profits and outlooks.
At midday, the Dow Jones industrial average was up 54.88 points, or 0.37 percent, at 15,065.62. The Standard & Poor's 500 Index was up 11.28 points, or 0.69 percent, at 1,657.34. The Nasdaq Composite Index was up 33.15 points, or 0.92 percent, at 3,622.23.
Europe's top shares were down 0.94 percent, near a two-week low, while emerging stocks fell 1.16 percent to trade at a five-week low, though both indexes had recovered slightly during the morning session.
Tokyo's Nikkei index fell 2.6 percent.
Broad equity losses weighed down the MSCI world share index by 0.04 percent to its lowest since July 11.
With the focus on the Fed cutting stimulus, the dollar index, which measures the greenback against a basket of currencies, fell 0.4 percent after touching its lowest level in more than two months.
The euro strengthened 0.7 percent versus the dollar at $1.3425, just a touch below its six-month high of $1.3452, while the dollar fell 0.4 percent against the Japanese yen at 97.17 yen.
Emerging market volatility also spurred the yen.
"The yen tends to attract buying when tensions in the market increase," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
In commodities trade, copper futures in London gained 0.2 percent to $7,318.75 a tonne, erasing earlier losses.
Spot gold prices rose 0.6 percent at $1,373.46 per ounce, hovering near a two-month high set on Monday.
Brent crude prices rebounded from an early decline, rising 51 cents or 0.46 percent at $110.41 a barrel, pressured by the Fed speculation but supported by the loss of Libya's oil exports as well as concerns that continuing unrest in Egypt could spread and interfere with supply. U.S. oil was off 30 cents, or 0.28 percent, at $106.80.
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