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* Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates http://tmsnrt.rs/2egbfVh
By Herbert Lash
NEW YORK, March 16 (Reuters) - Wall Street's S&P 500 index
scaled a new high on Tuesday and a gauge of global equities
neared an all-time peak as investors bet the Federal Reserve and
other central banks meeting this week will retain policies
supporting a post-pandemic recovery.
U.S. stocks retreated late in the session, with the Nasdaq
shedding more than a 1% gain, as yields on longer-maturity U.S.
Treasury bonds ticked up, nipping investor enthusiasm for
tech-stocks that are high growth but wary of rising inflation.
The U.S. dollar edged up against the euro and commodity
currencies such as the Australian and New Zealand dollars as the
two-day Fed meeting kept trading from being volatile.
.
But oil prices fell for a third day after Germany, France
and other European countries suspended use of AstraZeneca's
vaccine, threatening economic growth and fuel demand, and
tarnishing roll-outs as a pillar for a global recovery.
Speculation about what the Fed will say on Wednesday at the
end of its two-day meeting kept markets mostly range-bound.
"The hope out there, for at least some investors, is they do
an Operation Twist - buying long-term bonds and selling short
bonds to help the economy," said Tim Ghriskey, chief investment
strategist at Inverness Counsel in New York.
The Nasdaq rose to a two-week high on a rebound in tech
stocks at the heart of February's sell-off. MSCI's benchmark for
global equity markets, which is heavily weighted to the big U.S.
technology firms, advanced 0.3% to 679.01.
After the coronavirus pandemic, demand will increase further
for technology stocks, according to Johan Grahn, head of ETF
strategy at AllianzIM in Minneapolis.
"As long as technology is solving real problems for people,
there will continue to be a market for these types of
companies," Grahn said. "There will be more demand for
technology solutions across the board."
European stocks rose after an upbeat forecast from German
carmaker Volkswagen prompted a rally in the automobiles sector.
The broad FTSEurofirst 300 index rose 0.8%, closing in
on its record peak of February 2020, while the regional autos
sector jumped 2.1% to its highest level since June 2018.
On Wall Street, the Dow Jones Industrial Average fell
0.19%, the S&P 500 gained 0.07% and the Nasdaq Composite
added 0.36%.
Euro zone government bonds held ground as caution set in
before the Fed meeting.
Longer-term U.S. Treasury yields initially slipped as the
market looked ahead.
The 10-year U.S. Treasury note rose 0.4 basis
points to yield 1.6109%. Yields on the benchmark last week hit
1.642% on expectations of rising inflation.
The Fed is targeting maximum employment and higher inflation
expectations, and will do whatever it can to get higher
inflation, said Steven Ricchiuto, U.S. chief economist at Mizuho
Securities USA LLC in New York.
"This is what is motivating the sell-off in the 10-year
note, and there are a lot of people who are just basically
coming around to recognizing that," Ricchiuto said.
Fed policymakers are expected to forecast the U.S. economy
will grow in 2021 by the fastest rate in decades as it recovers
from a coronavirus-stricken 2020.
The Bank of England also meets this week, on Thursday, and
the Bank of Japan wraps up a two-day meeting on Friday.
The outlook for post-pandemic recoveries continued to
diverge between the United States and Europe.
President Joe Biden's order to make vaccinations available
to all adults by May 1 contrasted with stuttering roll-outs in
Germany, France and elsewhere, where use of the AstraZeneca
vaccine has been suspended amid concern over possible
serious side-effects.
In currencies, the dollar held small gains from overnight,
with caution evident ahead of the central bank meetings.
The dollar index rose 0.001%, with the euro
down 0.17% to $1.1908.
The Japanese yen strengthened 0.14% versus the
greenback at 108.97 per dollar.
Gold edged lower, pressured by a stronger dollar. U.S. gold
futures settled up 0.1% at $1,730.90.
Europe's medicines watchdog said the benefits of the
AstraZeneca vaccine outweigh its risks, but investors worry the
slow pace of vaccinations in the European Union could dampen
both the recovery and fuel demand.
Brent crude futures settled down 49 cents at $68.39
a barrel and U.S. crude futures fell 59 cents to settle
at $64.80 a barrel.
(Reporting by Herbert Lash with additional reporting by Ritvik
Carvalho in London and by Kevin Buckland and Kane Wu in Tokyo
Editing by Mark Potter and Mark Heinrich)
