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GLOBAL MARKETS-U.S. yield curve at steepest in 2 months; stocks rise

Published 15/09/2016, 02:16 am
© Reuters.  GLOBAL MARKETS-U.S. yield curve at steepest in 2 months; stocks rise
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* C.bank policy effectiveness debate heats up

* ECB official warns against more stimulus

* Stocks recover

* Oil rebounds (Updates with early U.S. market activity, changes dateline, previous LONDON)

By Caroline Valetkevitch

NEW YORK, Sept 14 (Reuters) - The U.S. Treasury yield curve hit its steepest in more than two months on Wednesday, while stock markets around the world inched higher as Apple AAPL.O shares gained.

Deepening worries over the ability of the world's major central banks to stimulate growth have triggered a recent rise in bond yields and sparked a bout of risk-off trading.

Euro zone bond yields rose across the board after European Central Bank Executive Board member Sabine Lautenschlaeger said the central bank should hold off on new monetary easing measures. yields touched their highest levels since Britain's vote to leave the European Union in late June, extending a rise that started after the ECB's policy meeting last week disappointed investors by introducing no new easing measures.

In the U.S. market, bond weakness ebbed after a dramatic selloff on Tuesday sent long-dated yields to three-month highs.

U.S. long-dated bonds have underperformed in the past month, in line Japanese government bonds as the Bank of Japan studies options to steepen the yield curve. Wednesday, the gap between five-year Treasury note yields US5YT=RR and 30-year bond yields US30YT=RR widened as far as 123.40 basis points, the widest since July 1.

Benchmark 10-year Treasury notes US10YT=RR were last up 5/32 in price to yield 1.72 percent, from 1.73 percent on Tuesday.

The U.S. dollar eased from an eight-day high against the yen as doubts grew that the BOJ would intensify its stimulative monetary policies next week.

The BOJ will consider making negative interest rates the centerpiece of future monetary easing, sources told Reuters. The move would underscore concerns over limits to economic stimulus efforts.

"The market does perceive to a certain extent that the BOJ is tapped," said Dean Popplewell, chief currency strategist at Oanda in Toronto.

At the same time, uncertainty about the outlook for U.S. interest rates pressured the greenback against other currencies.

The dollar eased from a session high of 103.34 yen touched in early trading and was last up just 0.05 percent against the Japanese currency at 102.58 yen JPY= .

Shares of Apple jumped 3.4 percent to $111.65, helping U.S. stocks recover from losses the previous day, on reports of strong demand for the new iPhone. Dow Jones industrial average .DJI was up 13.25 points, or 0.07 percent, to 18,080, the S&P 500 .SPX had gained 3.19 points, or 0.15 percent, to 2,130.21 and the Nasdaq Composite .IXIC had added 24.08 points, or 0.47 percent, to 5,179.33.

MSCI's all-country world stock index .MIWD00000PUS was up 0.1 percent, while European shares .FTEU3 were near flat.

Oil prices fell, extending recent losses.

Brent crude futures LCOc1 were down 1.4 percent at $46.44 a barrel, while U.S. crude CLc1 was down 1.7 percent at $44.12.

Data showed large weekly builds in U.S. petroleum products that overshadowed a surprise draw in crude stockpiles.

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