(Adds fresh prices, NEW YORK dateline)
* Stocks on Wall Street and in Europe gain
* Crude oil prices initially slip then regain 2014 highs
* China stocks gain after cut in benchmark mortgage rates
* Risk of Russia-Ukraine flare up could weigh on markets
NEW YORK/LONDON, Jan 20 (Reuters) - Bond yields backed off
their rapid rise this week and Wall Street rebounded on Thursday
as investors in Big Tech licked their wounds after Nasdaq's
slide into correction territory.
But concerns the Federal Reserve will be more aggressive in
raising interest rates this year than the market has priced in
continue to weigh on confidence as investors look to the U.S.
central bank's policy meeting next week for fresh guidance.
Crude prices initially eased before climbing to fresh
seven-year highs and the dollar dipped as the week's big rally
in U.S. Treasury yields mostly paused.
Strong earnings reports helped lift all 11 sectors of the
S&P 500 into the black in a broad rally while the major stock
indices in Europe also gained. MSCI's U.S.-centric all-country
world index rose 1.14%.
With all the noise about Fed tightening there has been
little discussion about the companies posting strong earnings,
said Tim Ghriskey, senior portfolio strategist at Ingalls &
"Companies are giving guidance as a quarter evolves. That's
a positive," Ghriskey added. "It's buying the dip. The market's
oversold. Are we going to go back to new highs? Eventually."
Advancing shares on both the New York Stock Exchange and
Nasdaq outpaced declining shares by more than a 3:1 ratio.
The broad pan-European FTSEurofirst 300 index rose
0.40%. On Wall Street, the Dow Jones Industrial Average
rose 1.14%, the S&P 500 gained 1.30% and the Nasdaq
Composite climbed 1.74%.
Investors have been concerned about rising rates because
they raise borrowing costs and could dent global growth
prospects and douse the earnings outlook for companies.
A Reuters poll of economists showed they expect the Fed to
tighten monetary policy at a much faster pace than thought a
month ago to tame high inflation.
Chair Jerome Powell will stick to the Fed's message of
tighter monetary policy next week as inflation has become a hot
political issue, said Joe LaVorgna, chief economist for the
Americas at Natixis.
"There's no reason for him at the moment to not deviate from
what clearly has been a more hawkish script. That runs the risk
of the markets maybe getting more nervous next week," LaVorgna
The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, rose up 1.8 basis
points at 1.043%. The yield on 10-year Treasury notes
was up 1.1 basis points at 1.838%, but was lower
than the two-year high of 1.902% it breached on Wednesday.
The key catalyst for markets so far in 2022 has been
expectations of higher rates as the Fed tightens monetary
policy, said Kevin Flanagan, head of fixed income strategy at
WisdomTree Investments Inc.
"Given the amount of selling pressure we saw earlier in the
week, the market is just consolidating a little bit. Rates don't
always move every day in the same direction," Flanagan said.
European Central Bank head Christine Lagarde said euro zone
inflation will decrease gradually over the year, adding that the
ECB did not need to act as boldly as the Fed because of a
different economic situation.
ASIA PERKS UP, UKRAINE EYED
Asian share markets broke a five-day slide, pushing higher
on Thursday as China underscored its diverging monetary and
economic picture by cutting benchmark mortgage rates.
China's blue-chip CSI300 index rose 0.9% on the
day, led by property developers, amid hopes government measures
would ease a funding squeeze in the embattled sector, even as
another developer warned of default.
Analysts at ING said geopolitical risks, notably the
possibility of Russia invading Ukraine, could continue to weigh
on global shares, adding to pressure on rising rates concerns.
The dollar index, which tracks the greenback versus a
basket of six currencies, was off 0.081% at 95.519 while the yen
slid 0.28% to $114.00. The euro was last down 0.03
percent, at $1.1338.
Crude prices rebounded. Brent crude was up $0.46 at
$88.9 a barrel. U.S. crude was up $0.67 at $87.63 a
Gold and silver touched fresh two-month highs, lifted by
worries surrounding inflation and Russia-Ukraine tensions.
Spot gold rose 0.3% to $1,845.58 an ounce, its
highest since Nov. 22.
(Reporting by Herbert Lash, additional reporting by Huw Jones
in London, Andrew Galbraith; Editing by Will Dunham and