* U.S. yield curve steepens after Fed announces bill
purchases
* Oil jumps after report of attack on an Iranian tanker
* Pound rallies further on Brexit bets
(Updates to stock market close)
By Rodrigo Campos
NEW YORK, Oct 11 (Reuters) - Stocks on Wall Street came off
their highs in late trading after U.S. President Donald Trump
announced a partial trade deal with China that could be signed
within weeks, with the boost from New York enough to give stocks
across the globe their largest daily gain in two months.
The British pound closed its strongest week against the
dollar in over two years on hopes that Britain was moving closer
to a smooth exit from the European Union and oil jumped over 2%
after reports of an attack on an Iranian tanker.
The MSCI world equity index .MIWD00000PUS posted its first
weekly rise in four. Frankfurt's main stock index .GDAXI , seen
as sensitive to trade wars because of its export-oriented
components, ended up 2.9% for its biggest daily gain since
January 4.
The U.S.-China deal agreed on Friday covers agricultural
purchases, currency and some aspects of intellectual property
protections, and it averted a tariff hike scheduled for next
week, though there was no mention of tariffs set to rise in
December. The S&P 500 rose as much as 1.9% but ended the day up 1.1%
after the agreement announcement triggered selling.
"Anything that was less than a comprehensive agreement was
likely to see some degree of market selloff," said Michael
James, managing director of equity trading at Wedbush Securities
in Los Angeles.
"The timing had a lot to do with the volatility. There were
15 minutes to go in the trading day on a Friday," he said.
Investors had said they were hoping for, at best, a deal
limited in scope, and noted that rhetoric had in the past failed
to translate into meaningful action.
"We have been here before, where we have seen positive talk.
It's possible they will be able to do a smaller deal around
tariffs, where there is some room for movement," said Mike Bell,
global market strategist at J.P. Morgan Asset Management.
The Dow Jones Industrial Average .DJI rose 390.17 points,
or 1.47%, to 26,816.59, the S&P 500 .SPX gained 32.14 points,
or 1.09%, to 2,970.27 and the Nasdaq Composite .IXIC added
106.27 points, or 1.34%, to 8,057.04. The pan-European STOXX 600 index .STOXX rose 2.31% and
MSCI's gauge of stocks across the globe .MIWD00000PUS gained
1.38%. Emerging market stocks rose 1.51%.
POUND RALLIES
Sterling jumped 2.55% versus the dollar this week, its
largest weekly gain in more than two years. The EU Brexit
negotiator reported a "constructive" meeting with his British
counterpart. Sterling GBP= ended the session at $1.2647, up 1.66%.
The Federal Reserve said it would begin buying about $60
billion per month in Treasury bills to ensure "ample reserves"
in the banking system, a program that will continue at least
until the second quarter of 2020. The dollar fell toward its session lows after the Fed
announcement. The dollar index .DXY fell 0.37%, with the euro EUR= up
0.33% to $1.104.
The Japanese yen weakened 0.40% versus the greenback at
108.43 per dollar as its global safe-haven luster faded.
In commodities, oil prices rose after Iranian media said a
state-owned oil tanker had been attacked in the Red Sea near
Saudi Arabia, raising the prospect of supply disruptions, but
bearish oil demand forecasts are seen keeping a lid on gains.
U.S. crude CLc1 rose 2.54% to $54.91 per barrel and Brent
LCOc1 traded at $60.69, up 2.69% on the day.
The Fed announcement triggered a steepening of the U.S.
yield curve, with the spread between 10-year US10YT=RR and
three-month US3MT=RR yields on track to end the session in
positive territory for the first time since May.
Benchmark 10-year notes US10YT=RR fell 23/32 in price to
yield 1.7342%, from 1.656% late on Thursday.
The 2-year note US2YT=RR fell 4/32 in price to yield
1.5975%, from 1.53% late on Thursday.
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Sterling loses a cent in two minutes before recovering https://tmsnrt.rs/2pdIUow
Global assets in 2019 http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
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