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GLOBAL MARKETS-U.S. stocks retreat from record high, dollar near 10-week low

Mon, 10th May 2021 22:35

* World shares climb to fresh record high, up 0.2%

* Copper prices at all-time peak

* Cyber attack on U.S. pipeline lifts oil prices

* Shock U.S. jobs data ease concerns over Fed rate hikes

* Dollar nurses losses, sterling rises above $1.40

By Koh Gui Qing

NEW YORK, May 10 (Reuters) - U.S. stocks fell on Monday and
the Dow Jones Industrial Average snapped back from a record
high, as worries about accelerating inflation dragged on shares
and hobbled the dollar, which struggled at a 10-week low.

U.S. equities' losses deepened as the breakeven rates for
U.S. Treasury Inflation-Protected Securities, or TIPS, scaled
multi-year highs, underscoring rising inflation expectations.

The Dow Jones Industrial Average lost 0.1% after
rising to a record 35,091.56 points earlier in the day. The S&P
500 extended losses to 1%, and the Nasdaq Composite
fell 2.55%.

The stocks pullback was mirrored by a broad retreat in
riskier assets such as oil and copper, as some investors grew
nervous after recent hefty gains.

Indeed, copper prices had also shot to an all-time high
earlier on Monday as investors piled in on bets of improved
demand amid a tightening supply, and driven by the fear that
they were missing out on a price rally.

Some analysts warned that investor bets on mounting
inflation pressure and ensuing interest rate hikes by the
Federal Reserve could be overdone.

"We see a high bar for the Fed to change its policy stance,"
Jean Boivin, head of BlackRock Investment Institute, said,
noting a "disconnect" between the market's pricing for rates to
rise as early as next year, and the Fed's rate projection.

For now, Monday's jump in the breakeven rate for TIPS was
the focus of some investors.

Speculation that growing price pressure would erode the
dollar's value kept the U.S. currency near a 2-1/2-month low. By
late Monday, the dollar index, which measures the
greenback against six major currencies, had pared losses to
stand at 90.302.

A sluggish dollar helped sterling rally to $1.416,
the highest since Feb. 25, despite Scotland's leader saying
another referendum on independence was inevitable after her
party's resounding election victory.

Rising inflation expectations lifted longer-dated U.S.
Treasury yields. The yield on benchmark 10-year Treasury notes
stood at 1.6038% after plunging to a two-month low
of 1.469% on Friday.

Five-year TIPS rose to 2.72%, its highest since
April 2011, following Friday's 2.681%.

The 10-year TIPS breakeven rate also rebounded after closing
at 2.503% on Friday. It was last at 2.54%, its highest since
April 2013, indicating the market sees inflation averaging 2.5%
a year for the next decade.

Oil prices gave up earlier gains as concerns that rising
COVID-19 cases in Asia will dampen demand outweighed
expectations that a major U.S. fuel pipeline could restart
within the week following a cyber attack.

Brent crude was little changed at $68.31 per barrel
and U.S. crude was also largely flat at $64.91 a barrel.

A weaker dollar also helped to boost gold prices. Spot gold
rose 0.3% to $1,835.44 per ounce, after touching its
highest since Feb. 11 at $1,845.06.

The focus now shifts to U.S. consumer price data due on
Wednesday, which will help investors determine whether to scale
back inflation expectations even further.

In the cryptocurrency market, ether pared earlier
gains to trade under $4,000. Bigger rival bitcoin
fell 4.6 % to $55,667.

(Reporting by Danilo Masoni in Milan and Stanley White in
Tokyo; editing by Mark Heinrich, Steve Orlofsky and Richard

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