* U.S. stocks add to gains in late trading on Russia
* Treasury yields hit 14-month low
* Oil trims gains, Brent turns lower
(Adds oil settlement prices)
By Chuck Mikolajczak
NEW YORK, Aug 8 Wall Street rallied on Friday
after Russia said it ended military drills near Ukraine, easing
investor nervousness about tensions in the region, but bond
yields fell in key markets worldwide after U.S. President Barack
Obama authorized air strikes in Iraq.
U.S. equities extended gains in late trading, with major
indexes hitting session highs. Russia's Defense Ministry said it
had finished military exercises in southern Russia, which the
United States had criticized.
"The active saber-rattling is probably over but the threat
is still there and yet we've chosen to overlook this," said Kim
Forrest, senior equity research analyst, Fort Pitt Capital Group
"The equity people definitely see the glass half full and
the bond people see it half empty, and that is what we are
seeing today is that fundamental split between the basic natures
of the traders."
The Dow Jones industrial average rose 135.54 points
or 0.83 percent, to 16,503.81, the S&P 500 gained 16.68
points or 0.87 percent, to 1,926.25 and the Nasdaq Composite
added 30.01 points or 0.69 percent, to 4,364.98.
The benchmark 10-year U.S. Treasury note was up
3/32, the yield at 2.424 percent. Air strikes in Iraq earlier
drove U.S. yields to the lowest level since June 2013 and
Germany's 10-year Bund fell to another record low, closing in on
Obama said in an address that he authorized "targeted"
strikes to protect the besieged Yazidi minority and U.S.
personnel in Iraq. Hours after his statements, U.S. military
aircraft bombed Islamic State artillery attacking Kurdish forces
near Arbil, Iraq.
Equity markets rebounded from earlier losses, with the MSCI
All World Index up 0.2 percent.
A broad index of European stocks ended down 0.7
percent and Germany's DAX Index lost 0.3 percent, but
was off the day's worst levels.
The intensifying risks in one of the world's big
oil-producing countries jolted petroleum markets, at one point
sending U.S. crude up more than $1 to $98.45 a barrel and
Brent to $106.39.
But oil prices trimmed gains. U.S. crude settled up 31 cents
to $97.65, while Brent turned lower to settle down 42 cents at
$105.02 as analysts said the strikes may lower the risk of
Fighting also resumed in Gaza between Palestinian militants
The dollar was off its lows but remained 0.2 percent
down having hit two-week low of 101.49 against the
safe-haven Japanese yen.
(Additonal reporting by Tricia Wright in London; Editing by