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GLOBAL MARKETS-Stocks pull back from record highs as big tech slides; yields retreat

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Saqib Iqbal Ahmed
·3 min read
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* 10-year U.S. Treasury yields reach 1.33% before reversingcourse

* MSCI world index falls 0.3%

* Bitcoin climbs above $52,000

* Brent crude prices at 13-month high(Updates to U.S. close of trading)

By Saqib Iqbal Ahmed

NEW YORK, Feb 17 (Reuters) - A gauge of global equitymarkets pulled back on Wednesday from the record high hit in theprevious session as investors sold technology-related companiesand the prospect of rising inflation tempered optimism around avaccine-led global economic recovery.

Benchmark 10-year Treasury yields reached a one-year high totrade near pre-pandemic levels, before reversing course even asdata pointed to a strengthening economy. The U.S. dollar gainedground against a basket of major currencies.

Data on Wednesday showed U.S. retail sales rebounded sharplyin January after households received additional pandemic reliefmoney from the government, suggesting a pick-up in economicactivity after the restraints imposed by a fresh wave ofCOVID-19 infections late last year.

Other data showed inflation pressures building up at thefactory gate, with producer prices posting their biggest gainsince 2009 in January.

Facing a still-scarred economy that may need an extendedtime to recover fully, Federal Reserve officials last monthdebated how to lay the groundwork for the public to acceptcoming higher inflation, and also the need to "stay vigilant"for signs of stress in buoyant asset markets, according tominutes of the U.S. central bank's Jan. 26-27 policy meeting.

The Fed has pledged to pin interest rates near zero untilinflation rises to 2% and looks set to exceed that goal.

That super-easy stance, coupled with the Bidenadministration's proposed $1.9 trillion spending bill forpandemic relief, has left some investors fretting over a comingsurge in inflation.

Inflation pressures may force the Fed to revise its policyin the future, said Michael O'Rourke, chief market strategist atJonesTrading in Stamford, Connecticut. But, he added, "It's ahigh threshold we have to cross in order to get them to react."

The MSCI's global stock index fell 0.31% to682.91. The index touched a record intra-day high of 687.26 onTuesday, before erasing gains to snap an 11-day winning streak.

On Wall Street, the Nasdaq fell as concerns about inflationpressured stocks and as investors rotated out of technologyshares.

The Dow Jones Industrial Average rose 90.27 points,or 0.29%, to close at 31,613.02, the S&P 500 lost 1.26points, or 0.03%, to end at 3,931.33 and the Nasdaq Compositedropped 82.00 points, or 0.58%, to finish at 13,965.50.

European shares retreated from near one-year highs asconcerns about a possible rise in inflation tempered optimismabout a vaccine-led global economic recovery, while Keringtumbled after sales at its Gucci brand fell more thanexpected.

The pan-European STOXX 600 index closed down 0.74%.

The U.S. dollar rose, helped by upbeat economic data. Thedollar index climbed 0.23% to reach a more than 1-weekhigh.

Bitcoin charged to a record high on Wednesday, a day afterthe cryptocurrency vaulted the $50,000 hurdle, even as analystswarned about the sustainability of such prices amid elevatedvolatility.

Oil prices rose, underpinned by a major supply disruption inthe southern United States this week where a winter stormpounded Texas.

Brent crude futures settled at $64.34 a barrel, up99 cents or 1.56%, while U.S. crude oil futures settledat $61.14 a barrel, up $1.09, or 1.82%.

Spot gold XAU= was down 1.09% at $1,774.71 an ounce.

(Reporting by Saqib Iqbal Ahmed;Editing by Nick Zieminski and Aurora Ellis)