British data prompts global bond sell-off; Wall Street falls

Thu Oct 27, 2016 4:56pm EDT
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By Hilary Russ

NEW YORK (Reuters) - Strong growth data out of Britain prompted the biggest daily sell-off in government debt for months and pushed yields on the world's benchmark bonds higher on Thursday, as expectations eased for a Bank of England interest rate cut.

The bond sell-off gained momentum in the United States after upbeat jobless claims data pointed to another robust nonfarm payrolls number next week.

Wall Street closed lower, dipping in a choppy session after the latest round of earnings reports. Losses in Comcast and consumer discretionary stocks offset gains in the healthcare sector, while European stocks slid and the U.S. dollar advanced against the Swedish crown and Japanese yen.

Official data showed that growth in Britain's economy slowed only slightly in the three months after it voted to exit the European Union. It grew 0.5 percent between July and September, a touch less than the second quarter's 0.7 percent, enough to temper fears about an immediate economic impact following the Brexit decision.

Britain's 10-year gilt GB10YT=RR advanced to more than four-month highs, while German 10-year bund yields rose to five-month peaks DE10YT=RR, lifting U.S. Treasury yields in the process.

"The stronger (gross domestic data) print in the UK has given further weight to speculation that the BoE will not provide further stimulus any time soon," said Rabobank strategist Richard McGuire.

In U.S. equity markets, investors took Qualcomm's deal (QCOM.O: Quote) to buy NXP Semiconductors (NXPI.O: Quote) for about $47 billion as a sign of confidence, sending up shares of both.

Despite beating earnings estimates a day earlier, Comcast (CMCSA.O: Quote) pulled the S&P and Nasdaq lower, paring some losses after falling as much as 2.7 percent following price target cuts from Barclays and Deutsche Bank.   Continued...

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, October 21, 2016. REUTERS/Staff/Remote