Stocks fall, bond yields hit multi-year highs on inflation fears

Lieutenant Samuel Indyk

LONDON, Feb 28 (Reuters) – Global stocks fell and bond yields hit multi-year highs on Tuesday after consumer prices hit a record high in France and accelerated in Spain, raising fears that central banks continue to tighten their monetary policy.

* In France, consumer prices harmonized with the European Union hit a record 7.2% in February, while in Spain, 12-month inflation harmonized with the EU was 6.1% , above January’s 5.9% and analysts’ expectations of 5.5%. by Reuters.

* The pan-European STOXX 600 index fell 0.4% but remains on track to gain 1.7% this month, its fourth positive month in five. MSCI’s global equities measure trailed 0.1%, near the nearly seven-week low hit on Friday.

* The broader MSCI Asia-Pacific ex-Japan equity index fell 0.4% to 511.39 points, close to the eight-week low hit on Monday.

* In bond markets, the yield on 10-year bonds in Germany, the eurozone benchmark, rose 7 basis points to 2.66%, its highest level since July 2011. Similar yields in France and Spain were trading at multi-year highs.

* “It’s one thing for the Federal Reserve to raise interest rates and reduce inflation, but they don’t want a hard landing,” said Allspring’s Matthias Scheiber. “The ISM data to be released this week will give us more clues as to how the US economy is coping with rising rates.”

* The yield on 10-year U.S. Treasuries rose 3 basis points to 3.9473%, after rising more than 40 basis points in February, its biggest monthly gain since September.

* In the currency market, the pound rose 0.2% to $1.2086, after rising 1% on Monday after Britain reached a new trade deal with the EU, improving the outlook of the British economy after Brexit.

* The euro rose 0.1% to $1.0619, after rising 0.6% the previous day, and the dollar index, which compares the US currency to a basket of six major currencies, remained flat at 104.64 units, racking up a 2.5% rise in February and poised to break a four-month losing streak.

* In commodities, crude oil rose about 1%, while gold traded at $1,810 an ounce, after falling about 6% in February.

(Reporting by Samuel Indyk in London and Ankur Banerjee in Singapore; Spanish edition by Carlos Serrano)