* OPEC deal sends oil prices soaring
* $2 trillion global bond rout since U.S. election
* 'Soft Brexit' hopes boost sterling
By Jamie McGeever
LONDON, Dec 1 Oil swept to a six-week high on
Thursday after OPEC agreed to cut crude output to help clear a
glut, while sterling hit a three-month peak after traders
interpreted comments from a senior UK official as a crack in the
government's "hard Brexit" line.
Global bond yields rose on prospects that resulting
inflationary pressures from oil's surge will lead to higher
interest rates, with the benchmark 10-year U.S. Treasury yield
matching November's 16-month high.
European stocks dived, shrugging off the bounce in Asian
shares and following the S&P 500's fall the previous day
instead. U.S. futures pointed to another slight decline at the
open on Wall Street.
The Organization of the Petroleum Exporting Countries on
Wednesday agreed to its first output cut since 2008, finally
taking action after global oil prices fell by more than half in
the last two years.
Non-OPEC Russia will also join output reductions for the
first time in 15 years.
U.S. crude oil added to overnight gains of 9 percent
to reach $50.00 a barrel for the first time since October. Brent
crude, which soared $4 overnight, touched a six-week
peak of $52.73 a barrel.
The jump in oil prices added to inflation expectations in
the United States, which were already rising on prospects that
President-elect Donald Trump would adopt reflationary policies
using a large fiscal stimulus.
"We've had a spike in oil prices plus better data, so we're
seeing the reflation trade come back," said Martin van Vliet,
senior rates strategist at ING.
As a result the rout in U.S. Treasuries resumed, with yields
pushing higher, especially on longer-dated bonds. The yield on
10-year and 30-year bonds <US10YT=RR<, which are
most sensitive to inflation eroding their value, rose 5 basis
points to 2.417 percent and 3.077 percent, respectively.
The 30-year yield has climbed more than 40 basis points
since the Nov. 8 presidential election, heading back towards a
14-month peak of 3.09 percent marked last week.
The 10-year yield had its biggest monthly rise in November
since 2009. Bonds across the world have lost about $2 trillion
in market value since the Nov. 8 U.S. election, according to
Bank of America Merrill Lynch data.
Sterling grabbed the limelight in currencies, jumping to a
three-month high against the euro and on a trade-weighted basis
after Britain's Brexit minister David Davis said London would
consider paying into the EU budget for market access.
The pound had slumped to historic lows following June's vote
to leave the European Union on fears of a "hard Brexit", which
would see Britain give up full access to the single market and
the EU customs union in favour of retaining full control over
"These headlines suggesting Britain may be able to access
the single market are generating substantial sterling demand
from traders and investors looking to reduce their short
positions and unwind hedges," said Neil Jones, head of FX hedge
fund sales at Mizuho.
The Bank of England's trade-weighted broader measure of
sterling rose to 78.8 and the pound was at its strongest
against the euro for three months at 83.96 pence per euro
. It hit a three-week high of $1.2650 against
the dollar after Davis' comments.
The dollar advanced to a 9-1/2-month high of 114.83 yen
before pulling back to 114.30 and the euro recovered from the
previous day's slide to trade back above $1.06 after
shedding 0.6 percent the previous day.
Europe's index of leading 300 shares was down 0.8
percent at 1,340 points, Germany's DAX was down 1 percent
and sterling's strength drove Britain's FTSE 100 down
Energy and resources stocks in Europe shares outperformed
the broader indices, which snapped a two-day winning run. The
STOXX Europe 600 Oil and Gas index was up 1.5 percent,
while the basic resources index was up 2.1 percent.
MSCI's index of Asian shares ex-Japan rose
0.4 percent, lifted by stronger-than-expected Chinese
manufacturing data, and Japan's Nikkei 225 rose 1.1
percent after the yen fell to its lowest since February close to
115 per dollar.
Spot gold touched a 10-month low of $1,163.45.
Bullion fell 8 percent in November, its worst month in three
(Editing by Hugh Lawson)