Stabilizing oil lifts shares and bond yields

Tue Dec 29, 2015 3:26pm EST
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By David Gaffen

NEW YORK (Reuters) - Stocks rose around the world and bond yields edged up on Tuesday as oil rebounded from 11-year lows on prospects for lower temperatures on both sides of the Atlantic.

The fall in oil prices has been a major driver of financial markets this year, hammering energy companies, lowering inflation expectations and reinforcing bets on loose monetary policy in Europe and a slow tightening in the United States.

U.S. West Texas Intermediate (WTI) futures were up $1.06 to $37.86 per barrel, rebounding from a more than 3 percent fall on Monday. Brent, the international benchmark, was at $37.83 per barrel, up $1.21, putting it a bit less than two dollars away from an 11-year low hit earlier in December.

This lifted shares on Wall Street and in Europe. The S&P 500 Index gained 1.1 percent to 2079.31, led by healthcare and financial shares, while the pan-European FTSEurofirst 300 index rose 1.5 percent and the euro zone's blue-chip Euro STOXX 50 index advanced 1.8 percent. [.EU] The MSCI All-World Index gained 1 percent.

Britain's blue-chip FTSE 100 index, opening for the first time since the Christmas break, rose 1 percent.

U.S. Treasuries sold off as equities improved and after a disappointing auction of five-year notes. The two-year Treasury yield rose to its highest since 2010, and was lately yielding 1.11 percent.

The U.S. 10-year Treasury yield rose 9 basis points to 2.31 percent, while German 10-year Bund yields, the benchmark for euro zone borrowing costs, rose 8 basis points to 0.64 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 percent. But it remained on track to mark a loss of around 12 percent for 2015, a year that saw it log a more than seven-year high in April.   Continued...

Traders work on the floor of the New York Stock Exchange in New York December 29, 2015. REUTERS/Lucas Jackson