GLOBAL MARKETS-U.S. yields ease from 14-month highs, oil bounces back

* Fed to let leverage exemption expire on March 31
* Wall St mixed as tech gains offset bank share losses
* Dollar hits highest level in a week
* Oil prices rise over 2% after steep Thursday fall

(Updates with U.S. afternoon trading, adds file photos for
media clients)
By Lewis Krauskopf and Carolyn Cohn
NEW YORK/LONDON, March 19 (Reuters) - Benchmark U.S. bond
yields edged back from 14-month highs on Friday as investors
digested the Federal Reserve's move to let a key leverage
exemption expire, while oil prices rebounded after getting
pummeled a day earlier.
Wall Street's main indexes were mixed in afternoon trading
as gains in U.S. tech and growth stocks countered declines in
bank shares after the Fed said it would not extend a temporary
pandemic regulatory break due to expire this month. The pan-European STOXX 600 index .STOXX lost 0.76% after
France imposed fresh regional lockdowns to curb the spread of
the coronavirus. MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.10%. Investors were seeking the next reasons to add risk
following the passing of President Joe Biden's $1.9 trillion
stimulus plan, broadening U.S. COVID-19 vaccinations and
encouraging economic news.
"We have had such a strong period of news-flow and catalysts
on the positive end that now that a lot of those have largely
been put into the market, we are now a little bit more
susceptible to negative news causing big drawdowns,” said Mark
Hackett, chief of investment research at Nationwide.
On Wall Street, the Dow Jones Industrial Average .DJI fell
130.45 points, or 0.4%, to 32,731.85, the S&P 500 .SPX gained
8.43 points, or 0.22%, to 3,923.89 and the Nasdaq Composite
.IXIC added 120.77 points, or 0.92%, to 13,236.94.
The S&P 500 banks index .SPXBK dropped 1.5%.
Markets have been consumed by moves in U.S. bond yields,
with investors still digesting the Fed's meeting earlier this
week. The central bank said it expects higher economic growth
and inflation in the United States this year, although it
repeated its pledge to keep its target interest rate near zero.
Benchmark 10-year notes US10YT=RR last rose 3/32 in price
to yield 1.721%, from 1.729% late on Thursday. The 10-year yield
hit 1.754% on Thursday, its highest level since January 2020.
"Ultimately, what we're seeing now is a great deal of
tension between market prices that embed several rate hikes
before the end of 2023 and the Fed's forecast that doesn't
expect lift-off until 2024," said Ryan Swift, U.S. bond
strategist at BCA Research in Montreal.
The dollar extended gains against major currencies, hitting
its highest level in a week. The dollar index =USD rose 0.093%, with the euro EUR=
down 0.08% to $1.1905.
Oil prices gained after falling about 7% in the prior
session, when a new wave of coronavirus infections across Europe
dampened expectations of any imminent recovery in fuel demand.
U.S. crude CLc1 recently rose 2.58% to $61.55 per barrel
and Brent LCOc1 was at $64.74, up 2.31% on the day.

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