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GLOBAL MARKETS-Yields inch up on Fed rate hike talk; stocks flat

Published 24/05/2016, 04:26 am
© Reuters.  GLOBAL MARKETS-Yields inch up on Fed rate hike talk; stocks flat
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* U.S. rates path points to summer hike

* Oil and copper fall

* Monsanto (NYSE:MON) shares up after Bayer unveils bid (Updates prices, adds European shares' close,)

By Caroline Valetkevitch and Saqib Iqbal Ahmed

NEW YORK, May 23 (Reuters) - Short-dated U.S. Treasury yields inched up on Monday while global stock markets were little changed as investors weighed the possibility that U.S. interest rates could soon rise.

Commodities were weak across the board. Oil prices fell and were on track for a fourth session of losses as investors worried about global supply, while copper fell toward three-month lows hit last week.

In the United States, an imminent rise in interest rates was looking more probable. The Federal Reserve will likely tighten policy a bit more quickly in 2017 than this year, by perhaps one or two more rate hikes, San Francisco Fed President John Williams said on Monday. Louis Fed President James Bullard said a relatively tight labor market in the United States may put upward pressure on inflation, raising the case for higher interest rates.

The Fed surprised investors when the central bank's meeting minutes released last week opened the door to a rate hike as early as in June.

Topping the agenda this week is whether U.S. economic data adds to the likelihood of a June or July rate increase.

MSCI's all-country world stock index .MIWD00000PUS was flat, while the U.S. S&P 500 index was also little changed.

"The market will be pretty rangebound until we get a better sense of what's happening with the Fed," said Adam Sarhan, chief executive of Sarhan Capital in New York.

"Right now, we're getting a lot of cross currents from the central bank and investors are looking for more direction with (Fed chief Janet) Yellen speaking on Friday."

Short-dated U.S. Treasury yields edged up, with the two-year yield hovering at its highest in two months on Fed rate-hike bets.

The yield on two-year Treasury bills US2YT=RR hit 0.905 percent, within striking distance of the two-month peak of 0.920 percent set last Thursday. Benchmark 10-year Treasury notes US10YT=RR were up 4/32 in price to yield 1.833 percent, down from Friday. Dow Jones industrial average .DJI was up 37.05 points, or 0.21 percent, to 17,537.99, the S&P 500 .SPX had gained 0.38 point, or 0.02 percent, to 2,052.7 and the Nasdaq Composite .IXIC had added 9.26 points, or 0.19 percent, to 4,778.82.

The pan-European FTSEurofirst 300 index .FTEU3 of leading regional stocks ended down 0.5 percent.

Shares of Monsanto MON.N . were up 5.1 percent in afternoon New York trading after Bayer unveiled a $62 billion bid for U.S. seeds company Monsanto. Bayer AG BAYGn.DE weighed on the European market.

Investors also digested economic data that showed euro zone private sector growth in manufacturing and services slowing a little in May, even though Germany continued to power ahead.

In currency markets, the U.S. dollar slipped against the yen on Japanese trade data and U.S. resistance to currency intervention from Tokyo.

The dollar was down 0.9 percent against the yen JPY= , while the dollar index .DXY , which measures the greenback against a basket of six major rivals, was last down 0.1 percent. crude prices LCOc1 were down 1 percent, on pace for a four-day losing streak and matching a similar run in mid-April, as investor focus returned to global supply, with Iran insisting on a rise in oil exports and U.S. drillers slowing the reduction in rigs. U.S. crude CLc1 was down 1 percent at $47.90 a barrel.

In the metals market, benchmark copper CMCU3 on the London Metal Exchange was down 0.3 percent at $4,565 a tonne at 1345 GMT.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Shanghai CSI 300 and global effects interactive

https://t.co/YqIYLIbInP Chinese A-shares vs developed and emerging stocks

http://link.reuters.com/rac25w

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