GLOBAL MARKETS-Rising U.S. yields cool down stocks

(Adds details, updates prices)
* Ten-year U.S. Treasury yields hit 1.333%
* MSCI world index falls 0.1%
* Yen hits five-month low, Bitcoin climbs above $51,000
* Brent crude prices up 0.9% at 13-month high
* Global asset performance http://tmsnrt.rs/2yaDPgn

By Danilo Masoni and Tom Westbrook
MILAN/SINGAPORE, Feb 17 (Reuters) - The rally in stock
markets stalled on Wednesday as a surge in U.S. Treasury yields
on optimism about a swift economic recovery put pressure on
lofty company valuations.
Benchmark 10-year Treasury yields reached a one-year high to
trade near pre-pandemic levels, as vaccine progress and
encouraging economic data begin to drive investor focus on
inflation.
The MSCI world equity benchmark .MIWD00000PUS fell 0.1% by
0908 GMT, as a weaker start of trading in Europe offset a brief
surge in Asia overnight. The index, which tracks shares in 49 countries, ended flat
on Tuesday to snap 11 straight positive sessions.
S&P 500 ESc1 and Nasdaq NQc1 futures were both little
changed. Ten-year Treasury yields US10YT=RR , up nearly 40
basis points this year, rose as far as 1.3330% before easing to
1.2838%.
"Regarding the bond market sell-off, things are finally
starting to get serious as real yields are on the rise, driven
by bets ... of central banks tightening sooner than previously
expected," said Arne Petimezas, analysts at AFS in Amsterdam.
"Risk-assets are now becoming vulnerable to a pull-back."
In the short term, however, investors expect central banks
to keep monetary policy loose and minutes later on Wednesday
from the U.S Federal Reserve's January meeting are expected to
reinforce that view.
"Recent remarks by (Fed Chair Jerome) Powell and several
other Fed officials show that the FOMC is very comfortable with
its current policy stance," wrote UniCredit strategists.
The gap between 10-year and two-year U.S. yields
US2US10=TWEB also reached its widest in nearly three years in
anticipation of short-term rates going nowhere. US/
Besides a cooling in stock-market exuberance, gold and the
Japanese yen JPY= have been other casualties of rising rates.
Gold, which pays no income and was last down 0.5% on the
day, tends to fall when yields rise, and it touched a two-week
low on Wednesday. GOL/
The yen is sensitive to U.S. rates because Japanese yields
are anchored and higher U.S. returns can attract investment
flows out of yen and into dollars. It fell to a five-month low
against the dollar and has lost 2.7% this year. The euro EUR=EBS fell 0.2% to $1.2075. Sterling GBP=D3 ,
which has been surging as vaccinations roll out rapidly across
the United Kingdom, was last down 0.1% at $1.3892. The dollar
index =USD rose 0.05%.
Bitcoin BTC=BTSP , which some see as a hedge against
inflation, rose to a high of $51,300 and was last up 3.6% after
first crossing $50,000 on Tuesday. Analysts, however, warned of
risks of tighter regulation and further volatility ahead in the
cryptocurrency market.
Gains in commodity prices have been another big driver of
inflation expectations. They've caught a further boost from a
Texas cold snap that has shut down about a fifth of U.S. oil
production and sent energy prices higher. O/R
Brent crude futures LCOc1 rose 0.9% to $63.9 a barrel,
their highest in 13 months. U.S. crude futures CLc1 rose 0.7%
to $60.45 a barrel. Copper prices CMCU3 were around their
highest level since 2012.
Global miner Rio Tinto RIO.L rode higher commodity prices
to post its best annual earnings since 2011 and declare a record
dividend. That sent its shares surging to a record high.

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