(Adds U.S. market open, byline, dateline; previous LONDON)
* Sweden ends five years of negative interest rates
* Bond yields rise, while dollar is mostly flat
* Wall Street, MSCI stock gauge grind to records
By Herbert Lash
NEW YORK, Dec 19 (Reuters) - Bond yields rose after Sweden
stopped five years of negative interest rates, signaling an era
of sub-zero rates may be near an end, while global equity
markets extended a rally that has pushed U.S. and global stock
benchmarks to record highs.
The dollar was roughly flat as investors awaited U.S. gross
domestic product data on Friday. The greenback was little moved
by a report showing U.S. factory activity in the mid-Atlantic
region has nearly stalled this month.
Gold eased as optimism about a preliminary U.S.-China trade
deal was offset by support from political uncertainty after the
U.S. House of Representatives voted to impeach President Donald
Trump.
Stocks rose as 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." 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 inch its way
back to zero - long considered their floor. Bond yields rose across the euro zone, with those in
higher-rated countries such as Germany, France and the
Netherlands 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.
Policy rates are still negative at the European Central Bank
and the Japanese, Danish, Swiss and Hungarian central banks. All
are expected to remain so for some time to come, with the
exception of Hungary.
"The Riksbank is moving away from negative rates, and in the
markets' mind this is something that the ECB could try at some
point," said Peter McCallum, rates strategist at Mizuho.
MSCI's gauge of stocks across the world .MIWD00000PUS
gained 0.18%, lifting the global benchmark to a record high,
while the three major equity indices on Wall Street also hit
fresh highs.
The Dow Jones Industrial Average .DJI rose 111.79 points,
or 0.4%, to 28,351.07. The S&P 500 .SPX gained 9.54 points, or
0.30%, to 3,200.68 and the Nasdaq Composite .IXIC added 40.45
points, or 0.46%, to 8,868.19.
Stocks in Europe also edged higher. The pan-regional STOXX
600 index .STOXX rose 0.09%, and the blue-chip FTSEurofirst
300 index .FTEU3 of regional shares closed up a preliminary
0.08%.
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 the second session despite trade optimism.
Oil prices hovered near the highest in three months in thin
pre-Christmas trading, buoyed by the previous day's news that
U.S. crude inventories declined and as U.S.-China trade tensions
continued to ease.
Brent crude futures LCOc1 rose 46 cents to $66.63 a
barrel, heading for the sixth straight day of gains. U.S. West
Texas Intermediate (WTI) crude CLc1 gained 48 cents at $61.41
a barrel.
The dollar index .DXY fell 0.06%, with the euro EUR= up
0.14% to $1.1126. The Japanese yen JPY= strengthened 0.27%
versus the greenback at 109.24 per dollar.
The Swedish crown was flat versus the greenback at 9.42 per
dollar.
Benchmark 10-year notes US10YT=RR last rose 4/32 in price
to yield 1.9099%.
Euro zone inflation expectations https://tmsnrt.rs/34Aa3kD
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