Global stocks plunge, dollar soars on rate hike outlook

By Nell Mackenzie and Ankur Banerjee

LONDON, Feb 17 (Reuters) – Stock markets fell around the world on Friday and the dollar hit a six-week high as jobs data revived expectations that the U.S. central bank would stick to its tightening trajectory. .

* Data from the US Department of Labor overnight showed that monthly producer prices accelerated in January and the number of Americans filing new claims for unemployment benefits fell unexpectedly in the week another sign of a market-adjusted labor market that is keeping pressure on inflation.

* The broader MSCI index of global stocks fell 0.4% to a one-week low of 645.73.

* The broader MSCI Asia-Pacific ex-Japan equity index fell 1.36% to 529.49, its lowest level since Jan. 9. The index is down 3% for the month and heading into its third consecutive week of losses.

* In Europe, the pan-European STOXX 600 index fell 0.64%, forecast for its first daily decline this week. The German DAX fell 0.82%. Blue-chip French stocks and Britain’s FTSE fell from all-time highs of 0.67% and 0.23% respectively.

* Equity returns across the Atlantic are also expected to follow the lead of S&P 500 futures and fell 0.63%.

* It’s hard to gauge how markets will interpret the Fed’s upcoming inflation moves, said Florian Ielpo, macroeconomic director at Lombard Odier Asset Management.

* Traders have increased their bets on how much they think the Fed will raise, now setting prices at a high of around 5.3% in July. Bets on a year-end rate cut have eased, with traders pricing in a 75% chance of a 25 basis point rate cut in December.

* Two Fed officials said on Thursday the U.S. central bank likely should have raised interest rates more than it did earlier this month, warning that further increases in borrowing costs were ahead essential to bring inflation down to desired levels.

* At its January 31 and February 1 monetary policy meeting, the Fed opted to moderate the pace of interest rate hikes, raising rates by 25 basis points to a range of 4.50% to 4 .75% after a series of steeper interest rate hikes last year.

* But since then, economic data has indicated a tight labor market and resilient inflation, keeping pressure on the central bank to maintain its tightening path.

* Bets on higher rate caps pushed two-year US Treasury yields, sensitive to interest rate expectations, to a three-month high of 4.69%.

* The 10-year Treasury yield rose about 5 basis points to 3.90% on Friday. Boosted by higher rate bets, the dollar index, which measures the US currency against six major rivals, rose 0.4% on Friday to 104.24, a new six-week high.

* The euro and the pound fell to their lowest levels in more than a month. The euro was down 0.3% at $1.0639, while the pound last traded at $1.1941, down 0.4% on the day.

* The Japanese yen rose 0.7% to 134.89 per dollar.

* Elsewhere, US crude fell 2.45% to $76.57 a barrel and Brent was at $83.16, down 2.33% on the day. (OR)

(Reporting by Nell Mackenzie and Ankur Banerjee; Editing by Yoruk Bahceli and Hugh Lawson, Editing in Spanish by Juana Casas)