December 29, 2015 / 12:51 AM / 2 years ago

Stabilizing oil lifts shares and bond yields

3 Min Read

Traders work on the floor of the New York Stock Exchange in New York December 29, 2015.Lucas Jackson

NEW YORK (Reuters) - Stocks rose around the world and bond yields edged up on Tuesday as oil rebounded from 11-year lows on prospects for lower temperatures on both sides of the Atlantic.

The fall in oil prices has been a major driver of financial markets this year, hammering energy companies, lowering inflation expectations and reinforcing bets on loose monetary policy in Europe and a slow tightening in the United States.

U.S. West Texas Intermediate (WTI) futures were up $1.06 to $37.86 per barrel, rebounding from a more than 3 percent fall on Monday. Brent, the international benchmark, was at $37.83 per barrel, up $1.21, putting it a bit less than two dollars away from an 11-year low hit earlier in December.

This lifted shares on Wall Street and in Europe. The S&P 500 Index gained 1.1 percent to 2079.31, led by healthcare and financial shares, while the pan-European FTSEurofirst 300 index rose 1.5 percent and the euro zone's blue-chip Euro STOXX 50 index advanced 1.8 percent. [.EU] The MSCI All-World Index gained 1 percent.

Britain's blue-chip FTSE 100 index, opening for the first time since the Christmas break, rose 1 percent.

People walk through the lobby of the London Stock Exchange in London, Britain November 30, 2015.Suzanne Plunkett

U.S. Treasuries sold off as equities improved and after a disappointing auction of five-year notes. The two-year Treasury yield rose to its highest since 2010, and was lately yielding 1.11 percent.

The U.S. 10-year Treasury yield rose 9 basis points to 2.31 percent, while German 10-year Bund yields, the benchmark for euro zone borrowing costs, rose 8 basis points to 0.64 percent.

Employees of the Tokyo Stock Exchange (TSE) work at the bourse in Tokyo August 26, 2015.Yuya Shino

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 percent. But it remained on track to mark a loss of around 12 percent for 2015, a year that saw it log a more than seven-year high in April.

China's blue-chip CSI300 index added 0.9 percent, while the Shanghai Composite Index closed up by a similar amount, as the central bank vowed to maintain reasonable credit growth and keep the yuan stable.

China's yuan fell to 6.5805 against the dollar in offshore trading, its weakest since a hefty devaluation in August, mirroring a fall in onshore rates, with traders citing strong year-end dollar demand. It later firmed a bit to 6.5774.

The euro dipped 0.3 percent to $1.0934.

Additional reporting by Sudip Kar-Gupta and Marius Zaharia in London and Lisa Twaronite and Shinichi Saoshiro in Tokyo; Editing by Nick Zieminski

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