GLOBAL MARKETS-Globals stock slide on inflation fears, dollar gains

(Adds close of U.S. markets)
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
* Nasdaq rebounds, but MSCI's global index slides
* U.S. 10-year Treasury yields retreat
* Dollar lifted by rise in yields
* Gold posts worst month since November 2016

By Herbert Lash
NEW YORK, Feb 26 (Reuters) - The Nasdaq recovered as the
bond rout retreated on Friday, but most other equity markets
swooned around the world as data showing a strong rebound in
U.S. consumer spending kept fears of rising inflation alive.
Shares of Amazon.com Inc AMZN.O , Microsoft Corp MSFT.O
and Alphabet Inc GOOGL.O edged up after bearing the brunt of
this week's downdraft to help the Nasdaq shake off its worst day
in almost four months on Thursday.
The Nasdaq Composite .IXIC advanced 0.56% while the S&P
500 .SPX slipped 0.48% after a late-session surge failed to
hold. The Dow Jones Industrial Average .DJI fell 1.51%.
U.S. consumer spending rose by the most in seven months in
January as low-income households got more pandemic relief money
and new COVID-19 infections dropped, setting up the U.S. economy
for faster growth ahead. The benchmark 10-year Treasury US10YT=RR note on Thursday
shot to a one-year high of 1.614%, a move that rocked world
markets. The note's yield is up more than 50 basis points this
year and is now close to the dividend return of S&P 500 stocks.
Yields on the 10-year US10YT=RR note fell steadily
throughout the session to trade 11.7 basis points lower at
1.3981%.
The amount of money swirling through markets and U.S. stocks
at close to all-time highs has caused investor angst, said JJ
Kinahan, chief market strategist at TD Ameritrade in Chicago.
"Many people are taking some profits and not necessarily
reinvesting that money quite yet," Kinahan said.
"The U.S. equity market is still the best game in terms of
safety versus opportunity. But there is a shift going on."
The scale of the recent Treasury sell-off prompted
Australia's central bank to launch a surprise bond-buying
operation to try to stanch the bleeding. MSCI's benchmark for global equity markets .MIWD00000PUS
slid 1.61% to 656.29 despite its large weighting to the U.S.
tech heavyweights.
In Europe, the broad FTSEurofirst 300 index .FTEU3 closed
down 1.64% at 1,559.48. Technology stocks .SX8P lost the most
as they continued to retreat from 20-year highs.
The dollar rose against most major currencies as U.S.
government bond yields held near one-year highs and riskier
currencies such as the Aussie dollar weakened.
The dollar index =USD rose 0.683%, with the euro EUR=
down 0.9% to $1.2066. The Japanese yen JPY= weakened 0.31%
versus the greenback at 106.55 per dollar.
Gold fell more than 2% to an eight-month low, as the
stronger dollar and rising Treasury yields hammered bullion and
helped it post its worst month since November 2016.
U.S. gold futures GCv1 settled 2.6% lower at $1,728.80 an
ounce.
Benchmark German government bond yields fell for the first
time in three sessions but were still headed for their biggest
monthly jump in three years after rising inflation expectations
triggered a sell-off.
The 10-year German bund DE10YT=RR note fell 1.2 basis
points to -0.271%.
European Central Bank executive board member Isabel Schnabel
reiterated on Friday that changes in nominal interest rates had
to be monitored closely. Copper recoiled after touching successive multi-year peaks
in six consecutive sessions, falling more than 3% as risk-off
sentiment hit wider financial markets after a spike in bond
yields.
Three-month copper on the London Metal Exchange (LME)
CMCU3 slumped to $9,112 a tonne.
MSCI's emerging markets equity index .MSCIEF slumped
3.36%, its biggest daily drop since markets plunged in March.
The surge in Treasury yields caused ructions in emerging
markets, which feared the better returns on offer in the United
States might attract funds away.
Currencies favored for leveraged carry trades all suffered,
including the Brazil real and Turkish lira TRYTOM=D3 , which
slid for a fifth straight day, erasing all the year's gains.
The heaviest selling earlier was in Asia, with MSCI's
broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS sliding more than 3% to a one-month low, its
steepest one-day percentage loss since the market rout in late
March.
Oil fell. Brent crude futures LCOc1 settled down 75 cents
at $66.13 a barrel. U.S. crude futures CLc1 fell $2.03 to
settle at $61.50 a barrel.

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