GLOBAL MARKETS - Stocks Wilt, Bond Yields Jump as Investors Focus on Rates

WALL STREET - NEW YORK/LONDON. A global equities gauge fell on Wednesday while benchmark U.S. Treasury yields rose as investors worried about interest rates a day after a weak bond auction and waited for a key U.S. inflation report due on Friday.

The dollar held firm, rising against the Japanese yen as placid markets encouraged investors to resume carry trades.

MSCI's gauge of stocks across the globe fell 7.54 points, or 0.95%, to 784.91, putting it on track for its biggest daily decline since April 30.

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"It's the aftermath of the bond auction Tuesday. Auction anxiety has set in," said Brian Jacobsen, chief economist at Annex Wealth Management. "To the extent it means interest rates are going to rise that can be worrying when consumers are already showing some signs of spending fatigue."

As of 11:37 a.m. ET, the Dow Jones Industrial Average fell 320.84 points, or 0.83%, to 38,532.02, the S&P 500 slid 30.52 points, or 0.58%, to 5,275.44 and the Nasdaq Composite lost 65.09 points, or 0.38%, at 16,954.79.

Europe's STOXX 600 index fell 1.06%.

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The U.S. 10-year Treasury yield hit a four-week high and was last up 7 basis points at 4.612%, from 4.542% late on Tuesday.

The 30-year bond yield rose 7.8 basis points to 4.7338% from 4.656% while the 2-year note yield, which typically moves in step with interest rate expectations, rose 2.6 basis points to 4.983% from 4.957% late on Tuesday.

The dollar index, which measures the greenback against a basket of currencies including the yen and euro, gained 0.35% at 105.03, with the euro down 0.41% at $1.081.

The dollar strengthened 0.26% to 157.57 yen, the highest since May 1.

Oil prices turned lower after grazing a four-week high on expectations major producers will extend output cuts at a Sunday meeting and that fuel consumption will start rising as the peak summer demand season kicks off.

U.S. crude lost 0.63% to $79.33 a barrel and Brent fell 0.68% to $83.65 per barrel.

Spot gold fell 0.97% to $2,338.15 an ounce as a stronger dollar, higher bond yields and hawkish comments from a Fed official on Tuesday still weighed on sentiment.