(Adds close of U.S. markets)
* MSCI world index, Wall Street extend rally to record highs
* Sweden ends five years of negative interest rates
* European bond yields rise; dollar mostly flat
* Oil prices hover near three-month highs
By Herbert Lash
NEW YORK, Dec 19 (Reuters) - Global equity markets extended
a year-end rally on Thursday that has pushed U.S. and world
stock benchmarks to record highs, while bond yields in Europe
rose after Sweden stopped five years of negative interest rates,
signaling the end of a sub-zero era.
Gold was little changed and the dollar was roughly flat as
investors awaited U.S. gross domestic product data on Friday and
investors shrugged off a report showing U.S. factory activity in
the mid-Atlantic region has nearly stalled this month.
Stocks got a boost after U.S. Treasury Secretary Steven
Mnuchin said the United States and China would sign their Phase
One trade pact at the beginning of January. Mnuchin said it was
completely finished and just undergoing a technical "scrub."
The market shrugged off President Donald Trump's
impeachment, as the Republican-controlled U.S. Senate is widely
expected to vote against removing him from office. MSCI's gauge of stocks across the world .MIWD00000PUS
gained 0.19%, lifting the global benchmark to a record high,
while the three major equity indexes on Wall Street hit
intra-day and closing record highs.
Quincy Krosby, chief market strategist at Prudential
Financial in Newark, New Jersey, noted the market angst caused
by the lack of a signed U.S.-China trade deal.
"That said, because we've gotten some positive comments from
both Beijing and Washington, it seems we're likely close to
getting a signing of the trade détente," she said.
U.S. stocks will maintain an upward bias until the start of
2020, when investors will look for more specific details in the
trade agreement, said Michael Arone, chief investment strategist
at State Street Global Advisors in Boston.
The Dow Jones Industrial Average .DJI rose 137.68 points,
or 0.49%, to 28,376.96. The S&P 500 .SPX gained 14.23 points,
or 0.45%, to 3,205.37, and the Nasdaq Composite .IXIC added
59.48 points, or 0.67%, to 8,887.22.
Stocks in Europe edged higher. The pan-regional STOXX 600
index .STOXX rose 0.17%, and the blue-chip FTSEurofirst 300
index .FTEU3 of regional shares closed up 0.14%.
Emerging market stocks lost 0.22%.
Earlier in Asia, stocks pulled back from a 1-1/2-year peak.
Japan's Nikkei .N225 fell 0.3% and China's stocks slipped
.CSI300 for a second session despite trade optimism.
Sweden's Riksbank raised benchmark borrowing costs to zero
from -0.25%, making the central bank the first of those around
the world that cut rates into negative territory to spur growth
to inch back toward zero. Bond yields rose across the euro zone. Those in higher-rated
countries such as Germany, France and the Netherlands were up
3-4 basis points FR10YT=RR NL10YT=RR .
The yield on Germany's benchmark 10-year Bund rose to as
much as -0.208% DE10YT=RR , a six-month high, up from -0.30%
earlier in the week.
Policy rates are still negative at the European Central Bank
and the Japanese, Danish, Swiss and Hungarian central banks.
With the exception of Hungary, all are expected to remain so for
some time.
Oil prices hovered near the highest in three months in thin
pre-Christmas trading, buoyed by Wednesday's news that U.S.
crude inventories declined and as U.S.-China trade tensions
continued to ease.
Brent crude futures LCOc1 rose 37 cents to settle at
$66.54 a barrel, heading for a sixth straight day of gains. U.S.
West Texas Intermediate (WTI) crude CLc1 settled up 29 cents
at $61.22 a barrel.
The dollar index .DXY fell 0.01%, with the euro EUR= up
0.1% to $1.1122. The Japanese yen JPY= strengthened 0.20%
versus the greenback at 109.32 per dollar.
The Swedish crown rose 0.09% versus the greenback at 9.41
per dollar.
Benchmark 10-year notes US10YT=RR last rose 2/32 in price
to yield 1.9169%.
U.S. gold futures GCv1 settled 0.4% higher to $1,484.40 an
ounce.
Euro zone inflation expectations https://tmsnrt.rs/34Aa3kD
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>