August 13, 2013 / 6:41 PM / in 4 years

GLOBAL MARKETS-U.S. bond yields, dollar, rise; Wall St. rebounds

* Treasury bond yields highest in 10 days
    * Wall Street rebounds on Fed official's comment
    * Dollar rallies after retail sales data; gold falls
    * European shares hit 2-1/2-month high on optimism about

    By Wanfeng Zhou
    NEW YORK, Aug 13 (Reuters) - U.S. Treasuries yields
approached two-year highs and the dollar rallied broadly on
Tuesday after a gauge of U.S. consumer spending rose at its
fastest pace in seven months.
    World equities markets edged higher. U.S. stocks rebounded
after a Fed official said the economic picture is too mixed for
the U.S. central bank to detail its exit strategy from massive
stimulus. European shares hit 2-1/2-month highs after data
pointed to an improving economic outlook across the euro region.
    The benchmark 10-year U.S. Treasury note was down 29/32, its
yield at 2.7244 percent. The rise in bond yields
hurt dividend stocks like utilities, while homebuilding shares
also underperformed because higher rates make mortgages less
    Atlanta Fed President Dennis Lockhart said recent data does
not present a clear picture of the economy, even as he did not
rule out some kind of decrease next month in the current $85
billion monthly pace of bond buys.
    U.S. retail sales outside of cars, gasoline and building
materials rose 0.5 percent last month, the biggest gain since
December. Overall retail sales rose 0.2 percent during the
month, just below analysts' expectations. 
    Strong U.S. data will encourage the Federal Reserve to trim
its purchases of bonds, perhaps as early as September. Such a
move will boost U.S. bond yields and bolster the appeal of
dollar-denominated assets.
    "For the next five and a half weeks every U.S. statistic
will be measured by its impact on the September 18th (Federal
Open Market Committee) decision," said Joseph Trevisani, chief
market strategist at WorldWideMarkets, in Woodcliff Lake, New
Jersey. "By that standard today's number should keep the Fed on
track to curtail quantitative easing purchases in September."   
    MSCI's all-country world index, a measure of
45 equity markets around the world, rose 0.3 percent.
    The Dow Jones industrial average gained 35.17 points,
or 0.23 percent, at 15,454.85. The Standard & Poor's 500 Index
 was up 4.32 points, or 0.26 percent, at 1,693.79. The
Nasdaq Composite Index was up 15.22 points, or 0.41
percent, at 3,685.17. 
    The FTSEurofirst 300 rose 0.6 percent to 1,236.99,
within sight of its 2013 peak at 1,258.09. The euro zone's
blue-chip Euro STOXX 50 ended up 0.5 percent at
2,841.61 points.
    A jump in Germany's ZEW economic sentiment survey dovetailed
with a rise in euro zone industrial output and the fastest rise
in UK house prices in seven years, bolstering a renewed sense of
optimism in the region.  
    "It is not only Germany that is moving in the right
direction," said Deutsche Bank economist Mark Wall. "There is a
general improvement taking place in Europe and in the context of
this being a debt crisis one shouldn't underestimate the
importance of getting back to a position of growth... The
$64,000 question is whether this is sustainable."
    The dollar index, which measures the greenback versus a
basket of six currencies, gained 0.6 percent to 81.787.
    The euro fell 0.3 percent to $1.3257, while the
dollar rallied 1.4 percent to 98.26 yen.
    In Asia, Japanese shares jumped 2.6 percent and the
yen fell after a media report that Prime Minister Shinzo Abe is
considering a cut in corporate taxes to counter the pain of a
planned sales tax increase. 
    Brent crude oil rose toward $110 per barrel after oil
exports from Libya fell to their lowest in two years,
heightening supply worries ahead of scheduled cuts in output
from fellow OPEC member Iraq.
    Brent crude oil futures for September rose 60 cents
to $109.57 per barrel, while U.S. light crude oil gained
48 cents at $106.59.
    Spot gold fell to $1,322 an ounce, retreating from a
three-week high as the dollar strengthened. A new hike in Indian
import taxes also undermined sentiment.
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