GLOBAL MARKETS-U.S. bond yields dip from 14-month highs, oil stabilises

* US 10-year yields at 1.68%, near 14-month high
* Oil prices flat after huge Thursday fall
* World stocks edge off Thursday's one-month highs

By Carolyn Cohn
LONDON, March 19 (Reuters) - U.S. bond yields on Friday
edged off the 14-month highs reached the day before as markets
looked to a U.S. economic recovery, while oil stabilised after a
7% slide.
Bond markets have experienced sharp moves this week as the
U.S. Federal Reserve said it expected higher economic growth and
inflation in the United States this year, although it repeated
its pledge to keep its target interest rate near zero.
Yields on U.S. 10-year notes, which move inversely to price
and have been rising for the past seven weeks on growth
expectations, spiked to their highest since January 2020 at
1.754% US10YT=RR on Thursday. They were last at 1.6838%.
German long-dated government bond yields slipped in tandem
with U.S. yields. DE30YT=RR
"Every man and his dog is looking at bond yields," said
Giles Coghlan, chief currency analyst at HYCM. "Even though (Fed
chair Jerome) Powell was dovish, bond yields marched higher,
purely on anticipation that the Fed is behind the curve - the
market is pricing rate hikes in."
MSCI world stocks .MIWD00000PUS fell 0.21% from one-month
highs in the previous session, though Nasdaq futures NQc1 rose
0.8% and S&P 500 futures ESc1 gained 0.4%.
Oil and U.S. stocks were hit on Thursday by worries over
faltering vaccine roll-outs and further slowdowns in Europe,
after France imposed a one-month lockdown in Paris and parts of
the north. French stocks .FCHI fell 0.5%. UK stocks .FTSE fell 0.7%
as energy stocks dropped.
After falling 7% on Thursday, Brent crude futures LCOc1
bounced 82 cents to $64.09 a barrel. U.S. crude CLc1 rose 88
cents to $60.88. O/R
Oil's retreat wiped out four weeks of gains in a single
session amid worries world demand would fall short of high
expectations.
The jump in Treasury yields has provided some support to the
U.S. dollar.
"The majority of market participants considers the Fed's
cautious approach to be justified and assumes that this supports
the economic recovery," Commerzbank analysts said in a note.
"That improves the longer-term economic outlook and
therefore justifies higher interest rates long-term as well as a
stronger dollar."
The dollar was little changed on Friday, however, easing
0.1% to 91.735 against a basket of currencies and holding steady
against the euro EUR= at $1.1922. It dipped 0.2% on the
low-yielding yen at 108.63 JPY= .
Markets were also unsettled by the Bank of Japan's (BOJ)
decision to slightly widen the target band for 10-year yields
and tweak its buying of assets.
The bank portrayed the changes as a "nimble" way to make
easing more sustainable, though investors seemed to take it as a
step back from all-out stimulus. A decision to confine purchases
to only TOPIX-linked ETFs knocked the Nikkei .N225 down 1.6%.
South Korea .KS11 lost 1%. Chinese blue chips .CSI300
shed 1.9%, perhaps unnerved by a fiery exchange between Chinese
and U.S. diplomats at the first in-person talks of the Biden
era. The rise in bond yields has weighed on gold, which offers no
fixed return, and left it down 0.4% at $1,743 an ounce XAU= .

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