GLOBAL MARKETS-Bond scares linger, investors look to Powell

* Bond worries remain before Powell's comments later
* U.S. Treasuries fall to 1.45%
* Global shares index down for third day running
* Dollar at seven-month high vs yen, five-month high vs
Swissie
* Gold prices off nine-month low

By Tom Arnold and Hideyuki Sano
LONDON, March 4 (Reuters) - Worries about lofty U.S. bond
yields hit global shares on Thursday as investors waited to see
if Federal Reserve Chair Jerome Powell would address concerns
about a rapid rise in long-term borrowing costs.
The spectre of higher U.S. bond yields also undermined
low-yielding, safe-haven assets, such as the yen, the Swiss
franc and gold.
Benchmark 10-year U.S. Treasuries slipped to 1.453%
US10YT=RR . They earlier touched their highest levels since a
one-year high of 1.614% set last week on bets on a strong
economic recovery aided by government stimulus and progress in
vaccination programmes.
"Equities and yields continue to both drive and thwart one
another," said James Athey, investment director at Aberdeen
Standard Investments.
"Fed speech continues to express very little concern and
certainly is not suggestive of any imminent action to curb the
rise in yields. The Powell speech today is hotly anticipated,
but I fear more out of hope than rational expectation."
The Euro STOXX 600 .STOXX was down 0.5% and London's FTSE
.FTSE 0.6% lower.
The MSCI world equity index .MIWD00000PUS , which tracks
shares in 49 countries, lost 0.5%, its third day running of
losses.
The MSCI's ex-Japan Asian-Pacific shares .MIAPJ0000PUS
lost 1.8%, while Japan's Nikkei .N225 fell 2.1% to its lowest
since Feb. 5.
E-mini S&P futures EScv1 slipped 0.2%. Futures for the
Nasdaq, the leader of the post-pandemic rally, fell 0.1%
NQcv1 , earlier hitting a two-month low.
Tech shares are vulnerable because their lofty valuation has
been supported by expectations of a prolonged period of low
interest rates.
But the market is focused on Powell, who is due to speak at
a Wall Street Journal conference at 12:05 p.m. EST (1705 GMT),
in what will be his last outing before the Fed's policy-making
committee convenes March 16-17. Many Fed officials have downplayed the rise in Treasury
yields in recent days, although Fed Governor Lael Brainard on
Tuesday acknowledged that concerns over the possibility a rapid
rise in yields could dampen economic activity.
In addition, anxiety is building over a pending regulatory
change in a rule called the supplementary leverage ratio, or
SLR, which could make it more costly for banks to hold bonds.
"The market is likely to be unstable until this regulation
issue will be sorted out," said Masahiko Loo, portfolio manager
at AllianceBernstein. "There aren't people who want to catch a
falling knife when market volatility is so high."
The market will also have to grapple with a huge increase in
debt sales after rounds of stimulus to deal with a recession
triggered by the pandemic.
The issue is not limited to the United States, with the
10-year UK Gilts yield on Wednesday touching 0.796% GB10YT=RR ,
near last week's 11-month high of 0.836%, after the government
unveiled much higher borrowing. On Thursday, Germany's 10-year yield DE10YT=RR was down 2
basis points to -0.31% after rising 5 basis points on Wednesday,
still moving in tandem with U.S. Treasuries.
Currency investors continued to snap up dollars as they bet
on the U.S. economy outperforming its peers in the developed
world in coming months. FRX/ The dollar rose to a roughly
seven-month high of 107.33 yen JPY= .
"U.S. dollar/yen has been on a one-way trajectory since the
start of 2021," said Joseph Capurso, head of international
economics at the Commonwealth Bank of Australia. "The
brightening outlook for the world economy is a positive for both
U.S. dollar/yen and Australian dollar/yen."
Other safe-haven currencies were weakened, with the Swiss
franc CHF= dropping to a five-month low against the dollar and
a 20-month trough versus the euro EURCHF= .
Other major currencies were little changed, with the euro
flat at $1.2054 EUR= .
Gold fell to a near nine-month low of $1,702.8 per ounce
XAU= on Wednesday and last stood at $1,714.
Investor focus on a U.S. economic rebound was unshaken by
data released overnight that showed the U.S. labour market
struggling in February, when private payrolls rose less than
expected. Oil prices rose for a second straight session on Thursday,
as the possibility that OPEC+ producers might decide against
increasing output at a key meeting later in the day underpinned
a drop in U.S. fuel inventories. O/R
U.S. crude CLc1 rose 0.6% to $61.65 per barrel. Brent
crude LCOc1 futures added 0.7% to $64.54 a barrel,

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Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country World Index Market Cap http://tmsnrt.rs/2EmTD6j
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