GLOBAL MARKETS-U.S. yields hit new heights; oil skids amid COVID-19 fears in Europe

* Wall Street drops, tech-heavy Nasdaq tumbles 3%
* 10-yr U.S. yield tops 1.75% as investors digest Fed
* Oil plunges 7% as dollar strength also weighs
* France locks down Paris amid COVID-19 caution

(Adds close of U.S. trading, fresh analyst comments)
By Lewis Krauskopf and Marc Jones
NEW YORK/LONDON, March 18 (Reuters) - Benchmark U.S.
Treasury yields hit 14-month peaks on Thursday, putting fresh
pressure on tech and other stocks as investors digested the
Federal Reserve's latest meeting, while concerns over COVID-19
cases in Europe also sapped risk appetite and helped pummel oil
prices.
The benchmark S&P 500 .SPX fell from record highs and the
tech-heavy Nasdaq slumped 3%, while MSCI's gauge of stocks
across the globe .MIWD00000PUS shed 0.77%.
Investors said markets were continuing to react to the Fed
meeting and Chairman Jerome Powell's news conference a day
earlier. The central bank said the U.S. economy is heading for
its strongest growth in nearly 40 years as it recovers from the
COVID-19 crisis and policymakers are pledging to keep their foot
on the gas despite an expected surge of inflation. "Rates are the key part of the entire story of the market,"
said Keith Lerner, chief market strategist at Truist Advisory
Services. "Within the 10-year itself, there is so much being fed
into that in terms of expectations of the economy, expectations
of inflation."
Oil prices tumbled, falling for a fifth day in a row, on
growing worries about rising COVID-19 cases in Europe as several
large economies have had to reimpose lockdowns. France's prime minister imposed a month-long lockdown on
Paris and parts of the north after a faltering vaccine rollout
and spread of highly contagious coronavirus variants forced
President Emmanuel Macron to shift course. "A best-case scenario for demand recovery had been priced
into this market. Everyone was celebrating the vaccine rollout
and reduced restrictions," said John Kilduff, partner at Again
Capital LLC in New York. "Now in Europe, it's gone off the rails
almost completely."
A rally in the dollar, which was supported by higher U.S.
bond yields, also pressured oil prices, as a stronger dollar
makes oil more expensive for holders of other currencies.
Brent crude futures LCOc1 settled down $4.72, or 6.9%, at
$63.28 a barrel, while U.S. crude oil futures CLc1 settled at
$60 a barrel, down $4.60, or 7.1%.
On Wall Street, the Dow Jones Industrial Average .DJI fell
153.07 points, or 0.46%, to 32,862.3, the S&P 500 .SPX lost
58.66 points, or 1.48%, to 3,915.46 and the Nasdaq Composite
.IXIC dropped 409.03 points, or 3.02%, to 13,116.17.
Energy .SPNY and tech .SPLRCT were the biggest S&P 500
sector decliners, while financials .SPSY , which are sensitive
to bond yields, were the lone major group in positive territory.
The pan-European STOXX 600 index .STOXX rose 0.40%.
The yield on the 10-year U.S. Treasury note US10YT=RR rose
as high as 1.754%, its highest level since January 2020.
Benchmark 10-year notes US10YT=RR last fell 21/32 in price
to yield 1.7135%, from 1.641% late on Wednesday.
"The Fed has given a little bit of a green light to higher
rates and the reason is pricing to reality, pricing to this
stronger economic environment," said Tony Rodriguez, head of
fixed income strategy at Nuveen.
Data showed the number of Americans filing new claims for
unemployment benefits unexpectedly rose last week, but the labor
market is regaining its footing as an acceleration in the pace
of vaccinations leads to more businesses reopening. The U.S. dollar rallied across the board, as higher Treasury
yields helped it recoup losses from the previous session.
The dollar index =USD rose 0.524%, with the euro EUR=
down 0.56% to $1.1911.

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