GLOBAL MARKETS-US Treasury debt sinks on data, dollar gains

* US bond yields on track for biggest weekly rise in a year
* US Treasury debt prices fall, oil and gold prices drop
* US consumer sentiment rises in early December, dollar up
* Peripheral European sovereign debt spreads widen
(Updates with ECB comments and European markets’ close)

By Daniel Bases

NEW YORK, Dec 10 (BestGrowthStock) – Upbeat U.S. consumer
sentiment data on Friday pushed investors to sell off
benchmark U.S. debt on expectations the economy will continue
to grow, but U.S. stocks (Read more about the stock market today. ) found little traction in the data.

Early strength in the U.S. dollar, which put downward
pressure on commodity prices, eroded after comments from
European Central Bank President Jean-Claude Trichet supported
the euro.[ID:nLDE6B91G8]

The sell-off in U.S. Treasury debt caps off a week of
relatively aggressive selling that has the benchmark 10-year
note’s yield on track for its biggest rise in this year.

“Yields are going to remain biased higher, but not in a
straight line,” said Kim Rupert, managing director of global
fixed-income analysis at Action Economics in San Francisco.

Rupert also cited the rising U.S. deficit and inflation
fears as well as a more robust outlook for economic growth as
the reasons for the Treasury bond market’s losses.

The benchmark U.S. 10-year Treasury note(US10YT=RR: ) fell
21/32 of a point in price, driving the yield up to 3.288

Equity markets made gains globally but their upward move
was mild. Contributing to the muted performance was a stronger
greenback squeezing the operating margins for U.S. exporters,
feeding into the recent inverse correlation between the
currency and U.S. stocks (Read more about the stock market today. ).

In addition, China’s central bank raised lenders’ required
reserves by 50 basis points, but left interest rates on hold.
While this eased concerns that aggressive policy tightening
could slow China’s growth down too much, it did keep investors
in check. [ID:nTOE6B907U]

European shares edged up to a fresh 26-month closing

“People are keeping an eye on economic numbers, but until
they all start moving in the same direction across the board,
traders are still going to be a bit jittery,” said Manoj
Ladwa, senior trader at ETX Capital.

The MSCI All-Country World stock index (.MIWD00000PUS: )
gained just 0.24 percent.

Peripheral European sovereign credit deteriorated on
Friday as prices wax and wane while uncertainty remains over
whether policymakers can put to rest the concerns the debt
crisis is under control.

The euro fell (Read more about the trembling euro. ) 0.10 percent to $1.3229 (EUR=: ). The U.S.
Dollar Index (.DXY: ) , which measures the dollar against a
basket of major trading partner currencies, gave up early
gains to trade flat, up just 0.01 percent at 80.079. Against
the yen, the greenback was up 0.29 percent at 83.92 yen
(JPY=: ).

Commodities priced in U.S. dollars weakened on the
currency’s gains. Spot gold prices (XAU=: ) fell $4.89 to
$1,382.50 an ounce, while U.S. crude oil futures (CLc1: ) lost
86 cents, or 0.97 percent, to $87.51 a barrel.


U.S. data showed consumer sentiment rose more than
expected in early December, according to the Thomson
Reuters/University of Michigan survey, while import prices in
November rose at their fastest pace in a year. In another
report offering evidence of a firmer U.S. economic recovery,
the government said the U.S. trade deficit narrowed much more
than expected in October. For details, see

Robert Tipp, chief investment strategist for Prudential
Fixed Income in Newark, New Jersey, said the market is likely
to be stuck in a range as sentiment vacillates between
optimism and pessimism.

In midday trade, the Dow Jones industrial average (.DJI: )
rose 18.73 points, or 0.16 percent, to 11,388.79. The Standard
& Poor’s 500 Index (.SPX: ) gained 4.79 points, or 0.39 percent,
to 1,237.79. The Nasdaq Composite Index (.IXIC: ) climbed 13.97
points, or 0.53 percent, to 2,630.64.

Shares of Netflix Inc (NFLX.O: ) jumped after Standard &
Poor’s said the movie rental company, along with F5 Networks
Inc (FFIV.O: ) and Newfield Exploration Co (NFX.N: ), will replace
Office Depot Inc (ODP.N: ), New York Times Co (NYT.N: ) and
Eastman Kodak Co (EK.N: ) in the S&P 500. Netflix was up 1.4
percent at $193.73.

The pan-European FTSEurofirst 300 index(.FTEU3: ) of top
shares rose 0.16 percent to 1,125.59, its best close since
September 2008, led by automakers and the U.S. consumer data.

Japan’s benchmark Nikkei stock index (.N225: ) fell 0.7
percent to close on Friday at 10,211.95 due to profit-taking.
But the Nikkei was up 0.3 percent for the week.

In the credit markets, the premium that investors demand
to hold peripheral government bonds rather than benchmark
German debt rose on Friday with investors keeping to the
sidelines as the European Central Bank’s bond buying slowed
down to a trickle.

The difference between Portuguese (PT10YT=TWEB: ) and German
10-year yields widened 18 basis points on the day to 346 bps
with traders pointing to little buying interest from the ECB.

The equivalent yield spread for Irish debt (IE10YT=TWEB: )
widened to 540 bps, out 9 bps on the day.
(Reporting and writing by Daniel Bases; Additional reporting
by Julie Haviv, Leah Shnurr, Natsuko Waki, Ellen Freilich and
William James; Editing by Jan Paschal)

GLOBAL MARKETS-US Treasury debt sinks on data, dollar gains