British data prompts global bond sell-off; Wall Street falls

By Hilary Russ

NEW YORK (Reuters) - Strong growth data out of Britain prompted the biggest daily sell-off in government debt for months and pushed yields on the world's benchmark bonds higher on Thursday, as expectations eased for a Bank of England interest rate cut.

The bond sell-off gained momentum in the United States after upbeat jobless claims data pointed to another robust non farm payrolls number next week.

Wall Street closed lower, dipping in a choppy session after the latest round of earnings reports. Losses in Comcast and consumer discretionary stocks offset gains in the healthcare sector, while European stocks slid and the U.S. dollar advanced against the Swedish crown and Japanese yen.

 

Official data showed that growth in Britain's economy slowed only slightly in the three months after it voted to exit the European Union. It grew 0.5 percent between July and September, a touch less than the second quarter's 0.7 percent, enough to temper fears about an immediate economic impact following the Brexit decision.

Britain's 10-year gilt > advanced to more than four-month highs, while German 10-year bund yields rose to five-month peaks >, lifting U.S. Treasury yields in the process.

"The stronger (gross domestic data) print in the UK has given further weight to speculation that the BoE will not provide further stimulus any time soon," said Rabobank strategist Richard McGuire.

In U.S. equity markets, investors took Qualcomm's deal to buy NXP Semiconductors for about $47 billion as a sign of confidence, sending up shares of both.

Despite beating earnings estimates a day earlier, Comcast pulled the S&P and Nasdaq lower, paring some losses after falling as much as 2.7 percent following price target cuts from Barclays and Deutsche Bank.

The Dow Jones industrial average <.DJI> fell 29.65 points, or 0.16 percent, to 18,169.68, the S&P 500 <.SPX> lost 6.39 points, or 0.3 percent, to 2,133.04 and the Nasdaq Composite <.IXIC> dropped 34.29 points, or 0.65 percent, to 5,215.97.

Interest-rate sensitive sectors also struggled as bond yields rose. The S&P real estate sector <.SPLRCR> was down 2.45 percent and on track for its worst decline in five weeks while utilities <.SPLRCU> shed 0.53 percent.

Europe's STOXX 600 <.STOXX> slipped 0.01 percent, with defensive sectors such as healthcare and utilities providing the biggest boost to the index, underscoring investor caution.

The MSCI all-country world stock index <.MIWD00000PUS> fell 0.34 percent.

The U.S. dollar hit its highest in more than seven and a half years against the Swedish crown after dovish comments from Sweden's central bank, and a three-month high against the yen > on expectations for a December Federal Reserve rate hike.

The dollar extended gains during the day, surging 1.82 percent against the Swedish crown at 9.0696 crowns >, after touching 9.0890, its highest since early March 2009.

Oil prices edged higher as commitments from Gulf OPEC members to cut production assuaged some lingering doubts in the market about cooperation from other producers.

Brent crude was up 49 cents, or 1 percent, at $50.47 a barrel while U.S. West Texas Intermediate crude gained 54 cents, or 1.1 percent, to $49.72.

(Additional reporting by William Schomberg, Costas Pitas, Abhinav Ramnarayan and John Geddie in London and Gertrude Chavez-Dreyfuss, Chuck Mikolajczak, Sam Forgione and Ethan Lou in New York; Editing by Nick Zieminski and James Dalgleish)