Euro rally, bond selloff ease; Greece eyed | Reuters

NEW YORK A bond market selloff that had rattled financial market confidence eased on Thursday, while the euro paused after a strong two-day run against the dollar, as investors looked for signs of progress in Greek debt negotiations.

German 10-year Bund yields DE10YT=RR, the benchmark for European debt costs, pulled back to 0.826 percent after rising to 0.998, the highest level since September 2014. The euro EUR= was last down 0.1 percent at $1.1262 after it had powered up to $1.1379, its highest level since May 18.

The euro had surged more than 3 percent over the prior two days, its biggest two-day run since March 2009.

“It seems to me that it is Europe that is driving most of what is going on right now - negotiations that are going on with Greece, the volatility in German Bunds, those sort of things.” said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin.

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“If those things settle down, then our markets will settle down into what they would normally do, which is get quiet before the big monthly reports.”

The U.S. employment report for May is due Friday.

Wall Street managed to once again find support near its 50-day moving average of around 2,100. The S&P 500 index hit a session low 2,100.58 before rebounding. It has bounced from that level several times in the past week.

Marginally better-than-expected jobless claims data helped narrow the expected opening declines, although that was balanced by a plunge in productivity figures. The data is likely keep the Federal Reserve on track to raise interest rates later this year.

In its annual assessment of the U.S. economy, the International Monetary Fund said the Federal Reserve should delay a rate hike until the first half of 2016 until there are signs of a pickup in wages and inflation.

The Dow Jones industrial average .DJI fell 72.37 points, or 0.4 percent, to 18,003.9, the S&P 500 .SPX lost 7.56 points, or 0.36 percent, to 2,106.51 and the Nasdaq Composite .IXIC dropped 11.17 points, or 0.22 percent, to 5,088.06.

MSCI’s all-country world index .MIWD00000PUS of stock performance in 46 countries was up 0.58 percent. The pan-European FTSEurofirst 300 stock index .FTEU3 was off 0.58 percent.

U.S. Treasury yields US10YT=RR rose as high as 2.425 before retreating and prices were last up 12/32 in price to yield 2.3231 percent.

After a 4-percent jump on Wednesday, Greek shares .ATG fell 1.3 percent as uncertainty clouded the country’s hopes of clinching an aid deal with euro zone creditors in coming days.

Greek Prime Minister Alexis Tsipras could return to Brussels for talks with senior EU officials as early as Friday night, an EU official said on Thursday, and discussions on a debt deal might include the heads of the IMF and European Central Bank.

In commodities, crude oil prices dropped as investors prepared for a widely-expected decision by OPEC members to maintain current production levels, despite worries over a global supply glut.

Brent crude LCOc1 slumped to $62.12 a barrel, a 2.7 percent fall, while U.S. crude was down $1.51 at $58.13 a barrel.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)

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