* MSCI World down 0.2%, pressured by bond yields
* Oil, gold also lower; dollar gains
* Biden signs $1.9 trillion stimulus into law
(Updates throughout, changes dateline from previous LONDON)
By Rodrigo Campos
NEW YORK, March 12 (Reuters) - An index of stocks across the
world fell on Friday but was set to post its strongest weekly
gain in five, while benchmark Treasury yields climbed to
13-month highs partly on optimism after a $1.9 trillion recovery
package was signed into law.
Gains in Shanghai and Tokyo stock markets proved tough to
match in Europe and on Wall Street, where banks were the silver
lining and the Nasdaq underperformed as the rotation from growth
to value continued. The Dow Industrials hit a record high.
The spike in Treasury yields gave support to the dollar
while the sell-off in stocks shone a light on the greenback's
safe haven appeal.
Against a backdrop of super-loose monetary policy, some
analysts expect inflation to pick up as vaccine rollouts lead to
economies reopening, leading to worries that the stimulus
package could overheat the American economy. U.S. President Joe Biden signed the stimulus legislation
before giving a televised address in which he pledged aggressive
action to speed vaccinations and move the country closer to
normality by July 4. "The risks of inflation picking up have increased
significantly due to a jump in money supply through stimulus and
the anticipated demand that we might see as the economy slowly
unlocks," said Jonathan Bell, chief investment officer at
Stanhope Capital in London.
The Dow Jones Industrial Average .DJI rose 141.83 points,
or 0.44%, to 32,627.42, the S&P 500 .SPX lost 11.89 points, or
0.30%, to 3,927.45 and the Nasdaq Composite .IXIC dropped
152.25 points, or 1.14%, to 13,246.42.
The pan-European STOXX 600 index .STOXX lost 0.28% and
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.31%.
Emerging market stocks lost 0.75%. MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.68%
lower, while Japan's Nikkei .N225 rose 1.73%.
U.S. 10-year Treasury yields US10YT=RR rose above 1.6% and
were on track to rise for the seventh straight week.
Bond selling "is more likely to be an expression of
conviction about the economy," said in a note Jim Vogel, senior
rates strategist at FHN Financial in Memphis, Tennessee.
Benchmark 10-year notes US10YT=RR last fell 27/32 in price
to yield 1.6194%, from 1.527% late on Thursday.
The recent, sharp, market moves give even more importance to
next week's meeting of the U.S. Federal Reserve for clues to its
views on rising yields and the threat of inflation.
In currency markets, the dollar index =USD rose 0.242%,
with the euro EUR= down 0.29% to $1.1949.
The Japanese yen weakened 0.39% versus the greenback at
108.92 per dollar, while Sterling GBP= was last trading at
$1.3915, down 0.54% on the day.
Markets are likely to remain volatile in the second quarter,
particularly for the dollar, which was much stronger than
expected at the start of the year, said Cliff Zhao, chief
strategist at China Construction Bank International.
"The strong U.S. dollar may weigh on some liquidity
conditions in the emerging markets," he said.
The Institute of International Finance on Thursday urged the
Fed to give guidance on its managing of higher yields to avoid
even more outflows from emerging markets.
Oil prices were little changed, with both Brent and WTI
struggling to keep the weekly performance in positive territory.
On Friday, U.S. crude CLc1 rose 0.09% to $66.08 per barrel
and Brent LCOc1 was at $69.60, down 0.04% on the day.
Spot gold XAU= dropped 0.1% to $1,719.01 an ounce. Silver
XAG= fell 1.14% to $25.78.
Bitcoin BTC=BTSP last fell 0.64% to $57,405.18.
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Global assets http://tmsnrt.rs/2jvdmXl
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
Fund flows into U.S. based growth and value funds https://tmsnrt.rs/3rKmhn2
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